My posts of October 18, 19, and 20 of 2010 proved that Libertarianism as a doctrine for government and the economy simply is fundamentally flawed both in theory and practice. Here are the links:
http://viewfromthebunker.blogspot.com/2010/10/flaws-of-pure-libertarianism-i.html
http://viewfromthebunker.blogspot.com/2010/10/flaws-of-pure-libertariansim-ii.html
http://viewfromthebunker.blogspot.com/2010/10/flaws-of-pure-libertarianism-iii.html
The axiomatic basis of Libertarianism is wrong: maximal freedom does NOT maximise happiness.
Libertarianism seems "good" on some measures in a static, time static world, but it fails in a dynamic world when changes can occur over time.
Libertarianism leads to a world dominated by Vikings, whether in reality or metaphorically.
Feudalism arises from Libertarianism: the rich and powerful enserf the common man and woman. The Vikings who have looted from the people create a new aristocracy for themselves and their descendants.
Toss unrestrained Libertarianism onto the junk heap of history. All talk using its principles should be viewed in the same light as Marxist talk: simply wrong and worthless in any argument.
Word of the Day
"Abnegate" - verb [$10] and "Abnegation" - noun [$10]
Abnegate means 1. to give up or deny oneself (a pleasure, etc.); 2. renounce or reject.
Abnegation means 1. denial; the rejection or renunciation of a doctrine; 2. = self-denial.
Sentence: Intellectual honesty mandates the abnegation of Libertarianism by its adherents. Libertarians! Bunkerman calls on you to abnegate your doctrine; it's a failure and fundamentally flawed in theory and practice.
Showing posts with label libertarianism. Show all posts
Showing posts with label libertarianism. Show all posts
Friday, April 8, 2011
Friday, February 25, 2011
A Hodge-Podge Day
When I was a boy & my parents were going out to dinner with friends or or to the horse races in Wheeling, West Virginia, they would declare a "hodge-podge" night, meaning that my brothers & I could make whatever we wanted for our dinner (usually my grandmother would provide a bit of adult supervision). That often meant peanut butter sandwiches with chocolate instant pudding for dessert, or something tasty like that.
"Hodge-podge" - noun [$2] - means a mixture of diverse ingredients.
Today is a hodge-podge blog day.
More on Public Employee Unions
A public employee union "bargaining" for anything represents Taxation without Representation and the stripping of power of the legislature. How can a bargain be struck that deprives the people of the power to legislate spending and taxation ? That's what a backroom bargain over wages or pensions or anything means. The union bosses and their cronies in the executive get together to put the State or City into a binding contract. What role does the people have ? Nothing. The government gets bound into a contract requiring it to PAY. And from where does that money come? Taxes.
When the contract is executed, the legislature finds itself having to vote taxes to fund it or be violating the contract and subject to various judicial confiscations. This is inherently taxation without representation. People getting no benefits have thus been forced to pay for endless retirement and health benefits of long retired state workers who might no longer even live in the state. This is involuntary servitude - a form of serfdom.
No legislature can bind another - no people can bind another - without their own legislature having FINAL say. That mean NO COLLECTIVE BARGAINING RIGHTS for public employee unions. Those are a violation of democracy and the principles of the nation and a republican form of government as mandated by the Constitution.
A Thought on Libertarianism
Here's a fine quote I read yesterday in an essay by T. S. Eliot on the writings of the philosopher, Francis Herbert Bradley [in this case comparing his thoughts to Matthew Arnold]: "For Utilitarianism was, as every reader of Arnold knows, a great temple in Philistia", meaning that if all value to humanity is measured by "utility", then where do moral or social or fraternal values fit? All becomes decadence, hedonism, the "values" of the Philistine rule. And what is almost synonymous with Utilitarianism? Libertarianism. Thus to modernize the thought:
Libertarianism is a great temple in Philistia.
Tea party adherents, beware. You are going down a path of darkness.
An Intensive Course on Literature
Simultaneously read multiple works of the following:
T. S. Eliot, W. B. Yeats, H. L. Mencken, and Sinclair Lewis.
Those are three Novel laureates writers in the English and American languages and a hugely influential, entertaining and literate newspaper columnist. All wrote in the period roughly from 1890 to 1940, a period that created the foundation of the modern world. The first three have wonderful vocabularies; Lewis provides crucial societal scenes of America we can still recognize today.
Those writers cover poetry, essays, plays, critical prose, polemical prose, imaginative novels, etc. As one reads more and more, your ability to understand them grows. They complement each other.
Post World War II writing is thin gruel compared to their works. Why bother with it at all?
Word of the Day
"Miasma" - noun [$10] hmmm a card from high school days.
Miasma means a pervasive influence or atmosphere that tends to deplete or corrupt.
Sentence: The multi-decadal miasma brought by State Boards of Education to American schools has infected secondary education in science and literature with gangrenous tissue causing the whole limbs of the body of student knowledge to rot.
"Hodge-podge" - noun [$2] - means a mixture of diverse ingredients.
Today is a hodge-podge blog day.
More on Public Employee Unions
A public employee union "bargaining" for anything represents Taxation without Representation and the stripping of power of the legislature. How can a bargain be struck that deprives the people of the power to legislate spending and taxation ? That's what a backroom bargain over wages or pensions or anything means. The union bosses and their cronies in the executive get together to put the State or City into a binding contract. What role does the people have ? Nothing. The government gets bound into a contract requiring it to PAY. And from where does that money come? Taxes.
When the contract is executed, the legislature finds itself having to vote taxes to fund it or be violating the contract and subject to various judicial confiscations. This is inherently taxation without representation. People getting no benefits have thus been forced to pay for endless retirement and health benefits of long retired state workers who might no longer even live in the state. This is involuntary servitude - a form of serfdom.
No legislature can bind another - no people can bind another - without their own legislature having FINAL say. That mean NO COLLECTIVE BARGAINING RIGHTS for public employee unions. Those are a violation of democracy and the principles of the nation and a republican form of government as mandated by the Constitution.
A Thought on Libertarianism
Here's a fine quote I read yesterday in an essay by T. S. Eliot on the writings of the philosopher, Francis Herbert Bradley [in this case comparing his thoughts to Matthew Arnold]: "For Utilitarianism was, as every reader of Arnold knows, a great temple in Philistia", meaning that if all value to humanity is measured by "utility", then where do moral or social or fraternal values fit? All becomes decadence, hedonism, the "values" of the Philistine rule. And what is almost synonymous with Utilitarianism? Libertarianism. Thus to modernize the thought:
Libertarianism is a great temple in Philistia.
Tea party adherents, beware. You are going down a path of darkness.
An Intensive Course on Literature
Simultaneously read multiple works of the following:
T. S. Eliot, W. B. Yeats, H. L. Mencken, and Sinclair Lewis.
Those are three Novel laureates writers in the English and American languages and a hugely influential, entertaining and literate newspaper columnist. All wrote in the period roughly from 1890 to 1940, a period that created the foundation of the modern world. The first three have wonderful vocabularies; Lewis provides crucial societal scenes of America we can still recognize today.
Those writers cover poetry, essays, plays, critical prose, polemical prose, imaginative novels, etc. As one reads more and more, your ability to understand them grows. They complement each other.
Post World War II writing is thin gruel compared to their works. Why bother with it at all?
Word of the Day
"Miasma" - noun [$10] hmmm a card from high school days.
Miasma means a pervasive influence or atmosphere that tends to deplete or corrupt.
Sentence: The multi-decadal miasma brought by State Boards of Education to American schools has infected secondary education in science and literature with gangrenous tissue causing the whole limbs of the body of student knowledge to rot.
Friday, January 21, 2011
Who Benefitted ?
Yesterday's post proved that the common man and woman obtained zero - nada - no benefit from the massive productivity gains since 1969. Where did that increased productivity come from ? Technology. New technology from computerization permitted everyone to do more work with less labor. Machines replaced people.
Expensive and time consuming studies could prove that, but our collective memory contains plenty of proof. Remember that great musical, "How to Succeed in Business Without Really Trying?" The secretarial pool and the junior executive pool no longer exist. Remember the job of receptionist at the elevator entrance on every floor? Gone. A person used to answer the telephone and take messages. No more - voice mail. Today many lawyers do their own documents and make changes; in the past a skilled legal secretary did them.
On the factory floor, fewer skilled machinists are needed as CNC machinery does their work after the set-up. Technology permits jobs to be performed in India for low wages that used to require highly paid analysts in NYC. X-rays are read in India, instead of by a US based skilled person. Plug-in modules dumb down the job of being a technician, reducing their skill - and pay levels.
You know all this deep in your mind and memory. BUT where is the profits go? Where did the gains in national income go? Who got it? Readers of yesterday's post know the common man and woman got nothing from 40 years of increasing national income.
The cynics are right. The people on top got it all. They took it all. Data prove this. I downloaded the table, "Table 695. Money Income of Families--Percent Distribution by Income" from the Census bureau. Families making $100,000 and over (in constant dollars) increased their share of the total national income from 8.7% in 1969 to 26% in 2008. Everyone else was mostly flat or got a lot less. Remember, the median Ozzie & Harriet family got nothing - almost no income gains for almost years. The group at the top got plenty.
We even see this process continuing today. WSJ: "Lenders See Little Choice: Layoffs - The banking industry, racked by the financial crisis and facing slower revenue growth, is starting to cut costs—increasingly at the expense of jobs."
The leadership at banks failed and is continuing to fail. Does the executive suite get a pay cut? Nope. They lay off lower paid workers, cut their pay, benefits and pension. The customer gets worse service. The bosses get MORE.
All this simple research and thinking proves the 200+ year old implied social contract was broken unilaterally around 1970. The group at the top left the rest of the people eating their dust and leftovers. For all the vaunted bloviations of the revolutionary baby boomers of the 1960s, the leaders of that generation did their best to screw the common man and woman. You can see that easily in people like the Clintons, Barry and the bespectacled Republicans. They all got plenty in favors and book deals. Joe Auto Mechanic got the shaft.
We need a new social compact, a square deal for the common men and women. We need an ideology to bind together the great majority of people in the US in the middle - the center. Let them rule and get a Square Deal. Cast aside the fringe right and left. The fringe right want to let the Vikings continue to raid and loot; the fringe left wants to turn us all into serfs for the government, union bosses and trust fund brats.
Under Free Fraternalism, the middle 60% or so gets complete freedom and a square deal; the top 20% pays part of their fortunes to support the unlucky and unendowed bottom 20%. Those numbers aren't strict lines; they are just rough guidelines. BUT I've proven in other posts that national happiness would increase under this political economic system. And in the past few days you have seen data to substantiate your own memories of 40 years, that national happiness has NOT improved for the great bulk of the people under the existing classic liberal system with its socialist admixture.
The existing system has failed: Time to recognize this and fix the problem.
More to come in future posts.
Word of the Day
"Pellucid" - adjective [$10]
Pellucid means easy to understand.
Sentence: Today's pellucid post should make the nature of the problem facing America obvious. Government and its implied social compact need to be fundamentally changed Free Fraternalism is the solution - a total makeover, not simple tinkering around the edges.
Expensive and time consuming studies could prove that, but our collective memory contains plenty of proof. Remember that great musical, "How to Succeed in Business Without Really Trying?" The secretarial pool and the junior executive pool no longer exist. Remember the job of receptionist at the elevator entrance on every floor? Gone. A person used to answer the telephone and take messages. No more - voice mail. Today many lawyers do their own documents and make changes; in the past a skilled legal secretary did them.
On the factory floor, fewer skilled machinists are needed as CNC machinery does their work after the set-up. Technology permits jobs to be performed in India for low wages that used to require highly paid analysts in NYC. X-rays are read in India, instead of by a US based skilled person. Plug-in modules dumb down the job of being a technician, reducing their skill - and pay levels.
You know all this deep in your mind and memory. BUT where is the profits go? Where did the gains in national income go? Who got it? Readers of yesterday's post know the common man and woman got nothing from 40 years of increasing national income.
The cynics are right. The people on top got it all. They took it all. Data prove this. I downloaded the table, "Table 695. Money Income of Families--Percent Distribution by Income" from the Census bureau. Families making $100,000 and over (in constant dollars) increased their share of the total national income from 8.7% in 1969 to 26% in 2008. Everyone else was mostly flat or got a lot less. Remember, the median Ozzie & Harriet family got nothing - almost no income gains for almost years. The group at the top got plenty.
We even see this process continuing today. WSJ: "Lenders See Little Choice: Layoffs - The banking industry, racked by the financial crisis and facing slower revenue growth, is starting to cut costs—increasingly at the expense of jobs."
The leadership at banks failed and is continuing to fail. Does the executive suite get a pay cut? Nope. They lay off lower paid workers, cut their pay, benefits and pension. The customer gets worse service. The bosses get MORE.
All this simple research and thinking proves the 200+ year old implied social contract was broken unilaterally around 1970. The group at the top left the rest of the people eating their dust and leftovers. For all the vaunted bloviations of the revolutionary baby boomers of the 1960s, the leaders of that generation did their best to screw the common man and woman. You can see that easily in people like the Clintons, Barry and the bespectacled Republicans. They all got plenty in favors and book deals. Joe Auto Mechanic got the shaft.
We need a new social compact, a square deal for the common men and women. We need an ideology to bind together the great majority of people in the US in the middle - the center. Let them rule and get a Square Deal. Cast aside the fringe right and left. The fringe right want to let the Vikings continue to raid and loot; the fringe left wants to turn us all into serfs for the government, union bosses and trust fund brats.
Under Free Fraternalism, the middle 60% or so gets complete freedom and a square deal; the top 20% pays part of their fortunes to support the unlucky and unendowed bottom 20%. Those numbers aren't strict lines; they are just rough guidelines. BUT I've proven in other posts that national happiness would increase under this political economic system. And in the past few days you have seen data to substantiate your own memories of 40 years, that national happiness has NOT improved for the great bulk of the people under the existing classic liberal system with its socialist admixture.
The existing system has failed: Time to recognize this and fix the problem.
More to come in future posts.
Word of the Day
"Pellucid" - adjective [$10]
Pellucid means easy to understand.
Sentence: Today's pellucid post should make the nature of the problem facing America obvious. Government and its implied social compact need to be fundamentally changed Free Fraternalism is the solution - a total makeover, not simple tinkering around the edges.
Wednesday, January 19, 2011
Square Deal ?
Did classic liberalism work? By classic liberalism, I mean the type of political economy proposed and explained by Adam Smith and John Stuart Mill. In their theories, maximum economic freedom was supposed to work by an "invisible hand" to increase the wealth of all people, and increase their happiness. Total "utility" (implied to be happiness) was maximized in a system with this freedom; mathematical proofs of this exist and are the basis of much economic theory. I've seen versions of this proof in graduate school level textbooks and B-school classes.
The question is, though, DID it work? And IS it working? Putting theory into practice and testing under dynamic conditions could expose ERRORS and unrecognized assumptions. Astrophysicists in the 1970s found this out; they assumed that all matter and energy could be seen directly or indirectly in some manner or marker from emitted light or other electromagnetic radiation. But clear contradictions existed even then in the rotation curves of galaxies. Decades later, dark matter and dark energy were discovered. The theories were incomplete in the 1970s.
\
Now, the Panic of 2008, the Great Recession and actual events since the 1970s seems to have exposed a flaw - a contradiction - in classic liberalism. Has the utility-happiness-wealth of the common man and woman increased since the 1970s? The "purported" deal - compact - of classic liberalism was that the hegemonic (Ruling) classes working with the political bureaucracy would cause GNP to increase on and on. But to the common man and woman, GNP is a meaningless number. They care about their personal happiness - their ability to make a living and raise their families and live comfortably throughout their lives.
From 1800 until at least the 1960s, it's rather obvious the Deal did work over the long term. By the 1950s and early 1960s in America a family could live, buy a home, send children to college or to a good job in the trades or a plant, and have a reasonable retirement. In 1800 or even 1900 that was a distance dream.
BUT now? And since then? Is there DATA that this "Deal" did not work and is not working, or is it still working? The 40-50 years since 1960-70 is long enough a baseline - that's almost two generations.
This is the question of the century. Has or is classic liberalism reached a range where it fails? Theories can work for awhile, but then breakdown.
My "gut" is that the answer is classic liberalism has been failing for decades, that the lives of the common man and woman has NOT been improving since the late 1960s and 1970s. One has to measure such a concept corrected for age and family composition. From my memories, the level that a family could do and how they could live in 1965 was really far better than now. A common American family must work much harder and longer to achieve the same standard of living.
Is my "gut" instinct correct?
I don't know. I am now researching this matter and will report on the results soon. Demographics, family composition and propensity to work for wages (i. e., women in the workforce) complicate the question, but I'm aware of those factors and will try to take them into account. Meanwhile, could you search your memories about this question with an open mind?
Word of the Day
"Heterodox" - adjective [$10]
Heterodox means (of a person, opinion, etc.) not orthodox.
Sentence: View from the Bunker provides heterodox opinions on investing, government and politics.
The question is, though, DID it work? And IS it working? Putting theory into practice and testing under dynamic conditions could expose ERRORS and unrecognized assumptions. Astrophysicists in the 1970s found this out; they assumed that all matter and energy could be seen directly or indirectly in some manner or marker from emitted light or other electromagnetic radiation. But clear contradictions existed even then in the rotation curves of galaxies. Decades later, dark matter and dark energy were discovered. The theories were incomplete in the 1970s.
\
Now, the Panic of 2008, the Great Recession and actual events since the 1970s seems to have exposed a flaw - a contradiction - in classic liberalism. Has the utility-happiness-wealth of the common man and woman increased since the 1970s? The "purported" deal - compact - of classic liberalism was that the hegemonic (Ruling) classes working with the political bureaucracy would cause GNP to increase on and on. But to the common man and woman, GNP is a meaningless number. They care about their personal happiness - their ability to make a living and raise their families and live comfortably throughout their lives.
From 1800 until at least the 1960s, it's rather obvious the Deal did work over the long term. By the 1950s and early 1960s in America a family could live, buy a home, send children to college or to a good job in the trades or a plant, and have a reasonable retirement. In 1800 or even 1900 that was a distance dream.
BUT now? And since then? Is there DATA that this "Deal" did not work and is not working, or is it still working? The 40-50 years since 1960-70 is long enough a baseline - that's almost two generations.
This is the question of the century. Has or is classic liberalism reached a range where it fails? Theories can work for awhile, but then breakdown.
My "gut" is that the answer is classic liberalism has been failing for decades, that the lives of the common man and woman has NOT been improving since the late 1960s and 1970s. One has to measure such a concept corrected for age and family composition. From my memories, the level that a family could do and how they could live in 1965 was really far better than now. A common American family must work much harder and longer to achieve the same standard of living.
Is my "gut" instinct correct?
I don't know. I am now researching this matter and will report on the results soon. Demographics, family composition and propensity to work for wages (i. e., women in the workforce) complicate the question, but I'm aware of those factors and will try to take them into account. Meanwhile, could you search your memories about this question with an open mind?
Word of the Day
"Heterodox" - adjective [$10]
Heterodox means (of a person, opinion, etc.) not orthodox.
Sentence: View from the Bunker provides heterodox opinions on investing, government and politics.
Monday, November 15, 2010
Viking Capitalism
As Europe suffered in the ninth century from Viking raids that brought devastation, social turmoil and serfdom, the world today suffers from Viking Capitalism.
What is Viking Capitalism?
Viking Capitalism relies on the ideology of unfettered economic power for whoever can grab it. And that societies should not organize to prevent the raids of the Vikings. Yup, that's right. Societies and peoples are actively prevented from defending themselves from the Vikings. No limits to the power of the few; rules and laws to prevent the common man and woman from effective defense.
This is a mutant of world Libertarianism designed to help the powerful get... more power. It's a naturally occurring mutation, though. The Hayek analysis applied to Libertarianism showed its failure in this specific fault [see this blog's post of October 18, 2010]. Unfettered freedom for the powerful leads them to grab more power and they use that power ruthlessly to prevent others from organizing to defend themselves. This is what the Vikings are doing in the world.
Who are the Vikings ?
Beefers - big, evil funds and their Rulng Class investors; Big multinational corporations; Non-governmental organizations such as the World Bank and IMF; CEO suite hogs; Ruthless intellectuals in the New Class; All those people who meet at Davos every year.
What do they do ?
Organize currency raids on nations. Cause financial turmoils with huge flows - tsunamis - of money flows in and out of nations. Raid capital markets. And trade flows. Free trade lets the multinationals gut jobs and factories in one nation, and move production to wherever they can make it cheaper, often via bribes and corrupt deals in the new locations.
The US has been subject to Viking capitalist raids since GATT. Small nations are hammered by beefer currency raids. The CEOs of the powerful corporations take more and more pay, yet shareholder returns suffer. Pay for the common man and woman worker goes down, despite increasing productivity by them. Those CEO hogs are another class of the Vikings.
The ruling classes use legislation and pressure by world organizations to prevent nations from defending themselves. In the US, legislation and the power groups in DC pile regulations onto business and tax employment in the US. Yet GATT lets the Vikings take jobs to small countries whose leaders they can pressure to gain favors, them freely import those good back to the US, without paying anything to support America. Those corporate Vikings don't even pay US income taxes - they use a barndoor-sized loophole to avoid tax until the money comes back to the US. Of course, it NEVER comes back. The Vikings use that money overseas to create power bases there.
The Viking intellectuals write laws to protect THEIR products and use governmental power to prevent free trade in those products.
Consider this dichotomy:
(I) A factory in Ohio makes a product via the hands of the common man. A Viking Capitalist can copy that plant & product in Asia and bring copies of the product back to the US freely, to gut the Ohio business. The Viking pays no US taxes, while the Ohio plant and workers paid plenty to support America. The Vikings and Ruling Classes say this is good and fine; they get richer while the common man or woman becomes destitute.
(II) A writer of books or software or filmmaker makes an intellectual product in the US, produces and sells it for a huge profit margin. Can a Viking copy that product in Asia and bring the goods back to America to sell cheaply? Nope. Copyright and intellectual property laws prevent it. Government power is used to protect products of the intellectual class. THEIR product is legally protected, but the factories and work product of the hands of the common man is raided by the Vikings.
Ditto the intellectual product of the Legal Vikings. Bar association rules and guilds enforced by judges prevent copying their product. They loot more and more.
Viking capitalism is ruining the lives of billions of people, all for the gains of the Ruling Classes worldwide. People of the world must throw off their fetters and adopt Fraternal Libertarianism - put regulations and chains on the Vikings; take freedom for themselves. Empty the hog trough and use those resources to help the people and small business directly. Stop the Viking raids on US jobs.
Viking Capitalism vs. Fraternal Libertarianism. That's the fight we want. Bring it on.
Word of the Day
"Contumely" - noun [$10] from Hamlet's Soliloquy, Shakespeare. Also "Contumelious" - adjective. Also "contumacy" and "Contumacious"
Contumely means 1. insolent or reproachful language or treatment; 2. disgrace.
Contumelious means reproachful, insulting or insolent.
Sentence: The Vikings want to be worshipped and adored; give them contumely instead. Social pressure can help. Do it, all the time and everytime.
What is Viking Capitalism?
Viking Capitalism relies on the ideology of unfettered economic power for whoever can grab it. And that societies should not organize to prevent the raids of the Vikings. Yup, that's right. Societies and peoples are actively prevented from defending themselves from the Vikings. No limits to the power of the few; rules and laws to prevent the common man and woman from effective defense.
This is a mutant of world Libertarianism designed to help the powerful get... more power. It's a naturally occurring mutation, though. The Hayek analysis applied to Libertarianism showed its failure in this specific fault [see this blog's post of October 18, 2010]. Unfettered freedom for the powerful leads them to grab more power and they use that power ruthlessly to prevent others from organizing to defend themselves. This is what the Vikings are doing in the world.
Who are the Vikings ?
Beefers - big, evil funds and their Rulng Class investors; Big multinational corporations; Non-governmental organizations such as the World Bank and IMF; CEO suite hogs; Ruthless intellectuals in the New Class; All those people who meet at Davos every year.
What do they do ?
Organize currency raids on nations. Cause financial turmoils with huge flows - tsunamis - of money flows in and out of nations. Raid capital markets. And trade flows. Free trade lets the multinationals gut jobs and factories in one nation, and move production to wherever they can make it cheaper, often via bribes and corrupt deals in the new locations.
The US has been subject to Viking capitalist raids since GATT. Small nations are hammered by beefer currency raids. The CEOs of the powerful corporations take more and more pay, yet shareholder returns suffer. Pay for the common man and woman worker goes down, despite increasing productivity by them. Those CEO hogs are another class of the Vikings.
The ruling classes use legislation and pressure by world organizations to prevent nations from defending themselves. In the US, legislation and the power groups in DC pile regulations onto business and tax employment in the US. Yet GATT lets the Vikings take jobs to small countries whose leaders they can pressure to gain favors, them freely import those good back to the US, without paying anything to support America. Those corporate Vikings don't even pay US income taxes - they use a barndoor-sized loophole to avoid tax until the money comes back to the US. Of course, it NEVER comes back. The Vikings use that money overseas to create power bases there.
The Viking intellectuals write laws to protect THEIR products and use governmental power to prevent free trade in those products.
Consider this dichotomy:
(I) A factory in Ohio makes a product via the hands of the common man. A Viking Capitalist can copy that plant & product in Asia and bring copies of the product back to the US freely, to gut the Ohio business. The Viking pays no US taxes, while the Ohio plant and workers paid plenty to support America. The Vikings and Ruling Classes say this is good and fine; they get richer while the common man or woman becomes destitute.
(II) A writer of books or software or filmmaker makes an intellectual product in the US, produces and sells it for a huge profit margin. Can a Viking copy that product in Asia and bring the goods back to America to sell cheaply? Nope. Copyright and intellectual property laws prevent it. Government power is used to protect products of the intellectual class. THEIR product is legally protected, but the factories and work product of the hands of the common man is raided by the Vikings.
Ditto the intellectual product of the Legal Vikings. Bar association rules and guilds enforced by judges prevent copying their product. They loot more and more.
Viking capitalism is ruining the lives of billions of people, all for the gains of the Ruling Classes worldwide. People of the world must throw off their fetters and adopt Fraternal Libertarianism - put regulations and chains on the Vikings; take freedom for themselves. Empty the hog trough and use those resources to help the people and small business directly. Stop the Viking raids on US jobs.
Viking Capitalism vs. Fraternal Libertarianism. That's the fight we want. Bring it on.
Word of the Day
"Contumely" - noun [$10] from Hamlet's Soliloquy, Shakespeare. Also "Contumelious" - adjective. Also "contumacy" and "Contumacious"
Contumely means 1. insolent or reproachful language or treatment; 2. disgrace.
Contumelious means reproachful, insulting or insolent.
Sentence: The Vikings want to be worshipped and adored; give them contumely instead. Social pressure can help. Do it, all the time and everytime.
Wednesday, October 20, 2010
Flaws of Pure Libertarianism. III.
Libertarians and the Right love to point out the historical failures of Socialism. And they are correct in doing so. Socialism and its pure form, Communism [aka Marxism], are connected to many of the worst genocides and crimes of the 20th century. The analysis of Friedrich Hayek showed that this was a great risk of those ideologies: the ruthless take over and ... do ruthless acts. But should we blame the ideology for the acts of its corruptors?
Marxist apologists say no, the system was never tried properly and people like Stalin, Hitler, Mussolini and Mao were independent evil leaders. They say the ideology is not responsible.
What is an ideology? Alvin Gouldner in his masterly work, The Dialectic of Ideology and Technology [a very hard read - I'm about 1/3 way thru], shows that ideologies arose from the ashes of the old regimes as respect for traditions of religion and aristocracy collapsed. Assessing "ideology" from a sociological perspective, he shows that an ideology is a rational system that connects the ideas to the world and gives people a basis for collective action. An ideology is a social glue to help them stick together to "change the world".
Without the ideology, the collective action cannot occur; the movement will quickly collapse as its participants squabble over details. The worldview of the ideology is crucial. Seen this way, there is no other conclusion but that the ideology of Marxism IS partly responsible for the evil crimes of its implementors. The ideology of Marxism - and Socialism in its pure form - is simply wrong and unstable. The ideology must bear this burden of guilt.
Let's look now at the common form of pure libertarianism. Where do its proponents proudly point to its successful implementation?
Chile. The Chicago School loves to say how its libertarian economics saved that nation and created its prosperity. Other nations in the southern part of South America also implemented the Chicago School's system in the decades of the 1970s and early 1980s.
Murders of thousands of persons followed. This is rather well documented. Ruthless leaders did those killings. Yet those leader groups [Pinochet, etc.] were using the libertarian ideology to help hold their followers together - they followed the Chicago School's economics. Thus the same standard and analysis that correctly condemns Marxism must also condemn libertarianism. It's a flawed ideology. Ruthless persons take over - or implement it - and do ... ruthless actions.
How can a libertarian argue with this? Friedrich Hayek would be his hero - his idol. Yet the Hayek analysis and the facts confirm that Libertarianism is unstable and can lead to great harm to people. It doesn't work, it's flawed and should be rejected as a political economic system. It should join Marxism on the dustbin of history.
Aristotle would see the beauty of this symmetry [ref.: Nichomachean Ethics]. He saw systems, concepts and values as having a continuum between two extremes, both of which were sub-optimal or bad. A middle ground was an optimum - that's where true virtue lay. In this case, that optimum is Fraternal Libertarianism, which lies midway between socialism and libertarianism.
Word of the Day
"Ferity" - noun [$1000] used in the essay, "Walking" by Thoreau.
Ferity means 1.a. the state or quality of being wild or savage, brutishness, wildness; hence ferocitt; b. Of a plant, etc.: wildness, uncultivated condition; 2. savage or barbarous condition, a form of this; 3. barbarity, barbarous or savage cruelty or inhumanity.
Sentence: Both Marxism and Libertarianism can unleash frightful ferity; the ruthless can achieve power and a free rein in both. Both ideologies are deeply flawed.
Marxist apologists say no, the system was never tried properly and people like Stalin, Hitler, Mussolini and Mao were independent evil leaders. They say the ideology is not responsible.
What is an ideology? Alvin Gouldner in his masterly work, The Dialectic of Ideology and Technology [a very hard read - I'm about 1/3 way thru], shows that ideologies arose from the ashes of the old regimes as respect for traditions of religion and aristocracy collapsed. Assessing "ideology" from a sociological perspective, he shows that an ideology is a rational system that connects the ideas to the world and gives people a basis for collective action. An ideology is a social glue to help them stick together to "change the world".
Without the ideology, the collective action cannot occur; the movement will quickly collapse as its participants squabble over details. The worldview of the ideology is crucial. Seen this way, there is no other conclusion but that the ideology of Marxism IS partly responsible for the evil crimes of its implementors. The ideology of Marxism - and Socialism in its pure form - is simply wrong and unstable. The ideology must bear this burden of guilt.
Let's look now at the common form of pure libertarianism. Where do its proponents proudly point to its successful implementation?
Chile. The Chicago School loves to say how its libertarian economics saved that nation and created its prosperity. Other nations in the southern part of South America also implemented the Chicago School's system in the decades of the 1970s and early 1980s.
Murders of thousands of persons followed. This is rather well documented. Ruthless leaders did those killings. Yet those leader groups [Pinochet, etc.] were using the libertarian ideology to help hold their followers together - they followed the Chicago School's economics. Thus the same standard and analysis that correctly condemns Marxism must also condemn libertarianism. It's a flawed ideology. Ruthless persons take over - or implement it - and do ... ruthless actions.
How can a libertarian argue with this? Friedrich Hayek would be his hero - his idol. Yet the Hayek analysis and the facts confirm that Libertarianism is unstable and can lead to great harm to people. It doesn't work, it's flawed and should be rejected as a political economic system. It should join Marxism on the dustbin of history.
Aristotle would see the beauty of this symmetry [ref.: Nichomachean Ethics]. He saw systems, concepts and values as having a continuum between two extremes, both of which were sub-optimal or bad. A middle ground was an optimum - that's where true virtue lay. In this case, that optimum is Fraternal Libertarianism, which lies midway between socialism and libertarianism.
Word of the Day
"Ferity" - noun [$1000] used in the essay, "Walking" by Thoreau.
Ferity means 1.a. the state or quality of being wild or savage, brutishness, wildness; hence ferocitt; b. Of a plant, etc.: wildness, uncultivated condition; 2. savage or barbarous condition, a form of this; 3. barbarity, barbarous or savage cruelty or inhumanity.
Sentence: Both Marxism and Libertarianism can unleash frightful ferity; the ruthless can achieve power and a free rein in both. Both ideologies are deeply flawed.
Tuesday, October 19, 2010
Flaws of Pure Libertarianism. II.
A crucial test of any theory is whether it is stable under small perturbations - changes. A stable theory will have forces that cause the system to return to equilibrium after being perturbed. An unstable theory will blow up.
Is pure libertarianism stable as a theory of the economy of a closed system? Let's analyze it.
What would cause a perturbation? This is easy - there are two sources. First, the world contains a population with a broad distribution over many, many dimensions: skills, strength, knowledge, geography, etc. second, there is luck. The luck of unknowingly happening to grow up onto top of a huge oil reserve, the luck of being a few days earlier in an invention and thus obtain the patent, the luck of being borne to royalty or wealth, the luck of being picked from a pool of dozens of seemingly and objectively equal applicants for a good job or school, on and on ...
Assume a person - or small group - has a economic advantage over others and implements that advantage to gain wealth: more resources, etc. That person can then use that, invest it and get more. And more. And more. And on and one infinitely. Barring bad "luck" or stupidity in investing, that person or group can accumulate such wealth as to become a force in the political sector. Then that person/group can use the governmental sector to lock in its wealth and power, eliminate competitors and protect its wealth from outsiders.
Don't say this does not or cannot happen. The examples of persons of great wealth buying seats in the US Senate are legion. [John Heinz, Rockefeller from WV, Maria Cantwell, etc.). The US Robber Barons bought entire state legislatures.
What forces exist in pure libertarianism to help prevent this - the creation of a new aristocracy and Ruling Class? The libertarian might say, "competition". Hmmm ...
Does that work?
It could ... BUT the government prevents hardball competition.
For example, an inventor creates a new product and gets a patent. A competitor could copy that idea-invention and sell it for less, but the GOVERNMENT protects the inventor-patentholder by punishing the copycat. Same for copyright protection (which protects computer software), same for natural resources. Who do you think protects that gold mine from others coming in to mine the gold? The government's police force. Government creates "property" and protects PROPERTY RIGHTS from squatters, from nonviolent thieves, from copycats, etc. Notice that none of this "competition" involves violence.
And theories of Pure Libertarianism seem to justify government only to prevent violence. [Cf. Nozick, in Anarchy, State and Utopia] But property rights and contract rights are a creation of GOVERNMENT and are protected by GOVERNMENT.
A truly Pure Libertarianism would have no governmentally protected property rights; such a system would have forces to prevent a new aristocracy - true, pure competition by substitution, copying or simple squatting & nonviolence takings. After all, unless you yourself protect something, it's not yours in a Pure Libertarian world, is it?
Thus we see that while truly pure - ultra, capital "P" - Pure Libertarianism does have forces to make that system stable, the type of small "p", "pure libertarianism" contemplated by almost all economic theorists (including the vaunted Chicago School) requires a powerful government to create and protect property. And enforce contracts. This government nullifies the forces of competition that would make such a system stable. The common system of pure libertarianism is unstable and in a self-contradictory manner uses governmental power to create fertile grounds for powerful, wealthy Ruling Classes and new aristocracies.
QED.
19th century America is an obvious example. Russia in the 1990s is another. And the creation of feudalism in Europe around the 9th century is another.
Notice the examples are the same as I used in yesterday's analysis of pure libertarianism under the Hayek criticism. This is no accident. Today provided a microscopic, small scale analysis; the Hayek criticism is a broad, macroscopic formulation of the same forces.
Also note that Fraternal Libertarianism does NOT fail under perturbation: the regulations of the wealthy and powerful prevent them from becoming a new Ruling Class and aristocracy with hard wall limits on their wealth and power.
Fraternal Libertarianism is stable and a viable political-economic system. Libertarianism is not.
Actions
Krypto wants me to sell some US stocks. This is a weak signal, but since the S&P 500 is nearing my target for the year end (1200), I will comply.
Word of the Day
"Soporific" - adjective & noun [$10]
Soporific means (adjective) tending to produce sleep; (noun) a soporific drug or influence.
Sentence: A Philistine or member of the Booboise might think today's post is soporific, but the rise of the Tea Parties in US political battles makes understanding the ideology of libertarianism crucially important to see how they might evolve ... or devolve.
Is pure libertarianism stable as a theory of the economy of a closed system? Let's analyze it.
What would cause a perturbation? This is easy - there are two sources. First, the world contains a population with a broad distribution over many, many dimensions: skills, strength, knowledge, geography, etc. second, there is luck. The luck of unknowingly happening to grow up onto top of a huge oil reserve, the luck of being a few days earlier in an invention and thus obtain the patent, the luck of being borne to royalty or wealth, the luck of being picked from a pool of dozens of seemingly and objectively equal applicants for a good job or school, on and on ...
Assume a person - or small group - has a economic advantage over others and implements that advantage to gain wealth: more resources, etc. That person can then use that, invest it and get more. And more. And more. And on and one infinitely. Barring bad "luck" or stupidity in investing, that person or group can accumulate such wealth as to become a force in the political sector. Then that person/group can use the governmental sector to lock in its wealth and power, eliminate competitors and protect its wealth from outsiders.
Don't say this does not or cannot happen. The examples of persons of great wealth buying seats in the US Senate are legion. [John Heinz, Rockefeller from WV, Maria Cantwell, etc.). The US Robber Barons bought entire state legislatures.
What forces exist in pure libertarianism to help prevent this - the creation of a new aristocracy and Ruling Class? The libertarian might say, "competition". Hmmm ...
Does that work?
It could ... BUT the government prevents hardball competition.
For example, an inventor creates a new product and gets a patent. A competitor could copy that idea-invention and sell it for less, but the GOVERNMENT protects the inventor-patentholder by punishing the copycat. Same for copyright protection (which protects computer software), same for natural resources. Who do you think protects that gold mine from others coming in to mine the gold? The government's police force. Government creates "property" and protects PROPERTY RIGHTS from squatters, from nonviolent thieves, from copycats, etc. Notice that none of this "competition" involves violence.
And theories of Pure Libertarianism seem to justify government only to prevent violence. [Cf. Nozick, in Anarchy, State and Utopia] But property rights and contract rights are a creation of GOVERNMENT and are protected by GOVERNMENT.
A truly Pure Libertarianism would have no governmentally protected property rights; such a system would have forces to prevent a new aristocracy - true, pure competition by substitution, copying or simple squatting & nonviolence takings. After all, unless you yourself protect something, it's not yours in a Pure Libertarian world, is it?
Thus we see that while truly pure - ultra, capital "P" - Pure Libertarianism does have forces to make that system stable, the type of small "p", "pure libertarianism" contemplated by almost all economic theorists (including the vaunted Chicago School) requires a powerful government to create and protect property. And enforce contracts. This government nullifies the forces of competition that would make such a system stable. The common system of pure libertarianism is unstable and in a self-contradictory manner uses governmental power to create fertile grounds for powerful, wealthy Ruling Classes and new aristocracies.
QED.
19th century America is an obvious example. Russia in the 1990s is another. And the creation of feudalism in Europe around the 9th century is another.
Notice the examples are the same as I used in yesterday's analysis of pure libertarianism under the Hayek criticism. This is no accident. Today provided a microscopic, small scale analysis; the Hayek criticism is a broad, macroscopic formulation of the same forces.
Also note that Fraternal Libertarianism does NOT fail under perturbation: the regulations of the wealthy and powerful prevent them from becoming a new Ruling Class and aristocracy with hard wall limits on their wealth and power.
Fraternal Libertarianism is stable and a viable political-economic system. Libertarianism is not.
Actions
Krypto wants me to sell some US stocks. This is a weak signal, but since the S&P 500 is nearing my target for the year end (1200), I will comply.
Word of the Day
"Soporific" - adjective & noun [$10]
Soporific means (adjective) tending to produce sleep; (noun) a soporific drug or influence.
Sentence: A Philistine or member of the Booboise might think today's post is soporific, but the rise of the Tea Parties in US political battles makes understanding the ideology of libertarianism crucially important to see how they might evolve ... or devolve.
Monday, October 18, 2010
Flaws of Pure Libertarianism. I.
Over the past few years I've written many times about world events that show flaws in the ideology of pure libertarianism. The recent series on the Good and Bad of Socialism and Capitalism brought out parts of this thinking, too. Recent discussions with a friend of mine and some reading produced new thinking - Bunkerman never stops thinking - that I will post in new series here this week on The Flaws of Pure Libertarianism. Note the "Pure" - nothing that I will post contradicts or impairs my recent proof and belief that the optimal political system is Fraternal Libertarianism. The coming US election and the froth in the Tea Parties, however, makes this a good time to re-examine Libertarianism at its core.
The first flaw is critical. Libertarian revere Friedrich Hayek, whose superb book, The Road to Serfdom, exposes a fundamental flaw in Socialism, which is an important ideological competitor to Libertarianism. Here's the gist: socialism concentrates economic power in the government. Ruthless, unprincipled people will gain power in the government through that ruthlessness and thence be able to control the lives of everyone. Hence leading all people down the "Road to Serfdom". Fine. It's true and has happened. Soviet Russia is the text book example.
Let's think about Libertarianism. Its unfettered economic freedom will lead to great concentrations of wealth as many local variables will give some persons advantages over others: innovation, luck, etc. Simple innovation gives much concentrated power - being first. That contains some good - innovation is rewarded. The 19th century is littered with example of inventions leading to great wealth via the sheer usefulness of that invention. That is fine. Luck also helps. Bill Gates' firm was selected by IBM to provide the operating system for its PC that set the model for almost all PCs for decades. His father had connections to IBM. His operating system sucked, but he got the order. Luck.
Wealth is Power. Massive wealth can be used to gain political and legal power, that in turn leads to more and more wealth, and to protect that wealth. A Ruling Class is formed by connections between (A) the concentrations of Wealth that naturally arise from Libertarianism and the (B) the desire for wealth by the legal and lobbying courtiers clustered around the centers of governmental power. [Remember, government does exist in Pure Libertarianism, if simply for protection from violence. Robert Nozick proved this in his great work, Anarchy, State and Utopia.]
And that Ruling Class then makes laws and rules to entrench and increase the wealth and power of the Ruling Class. Over time they enserf the common man.
QED: Pure Libertarianism leads to Serfdom for the common man. Libertarianism fails to withstand the analysis of Hayek. This is fatal to Pure Libertarianism.
Examples are the 9th century in Europe, the 19th century in America and the 1990s in Russia.
Tomorrow I will examine the stability of the Libertarian system. Will it inevitably lead to the failure outlined above?
Fraternal Libertarianism does NOT succumb to the Hayek criticism. Its inherent hard controls on the Ruling Classes prevent them from gaining sufficient power to enserf the common man.
Word of the Day
"Supernal" - adjective [$10] esp. poetic
Supernal means 1. heavenly, divine; 2. of or concerning the sky; 3. lofty (of more than earthly or human excellence, powers, etc.)
Sentence: Devotees to pure Libertarianism wax eloquently about the goodness and benefits of that ideology, ascribing it near supernal powers. But on examination, that systems has fatal flaws that Bunkerman will expose this week.
The first flaw is critical. Libertarian revere Friedrich Hayek, whose superb book, The Road to Serfdom, exposes a fundamental flaw in Socialism, which is an important ideological competitor to Libertarianism. Here's the gist: socialism concentrates economic power in the government. Ruthless, unprincipled people will gain power in the government through that ruthlessness and thence be able to control the lives of everyone. Hence leading all people down the "Road to Serfdom". Fine. It's true and has happened. Soviet Russia is the text book example.
Let's think about Libertarianism. Its unfettered economic freedom will lead to great concentrations of wealth as many local variables will give some persons advantages over others: innovation, luck, etc. Simple innovation gives much concentrated power - being first. That contains some good - innovation is rewarded. The 19th century is littered with example of inventions leading to great wealth via the sheer usefulness of that invention. That is fine. Luck also helps. Bill Gates' firm was selected by IBM to provide the operating system for its PC that set the model for almost all PCs for decades. His father had connections to IBM. His operating system sucked, but he got the order. Luck.
Wealth is Power. Massive wealth can be used to gain political and legal power, that in turn leads to more and more wealth, and to protect that wealth. A Ruling Class is formed by connections between (A) the concentrations of Wealth that naturally arise from Libertarianism and the (B) the desire for wealth by the legal and lobbying courtiers clustered around the centers of governmental power. [Remember, government does exist in Pure Libertarianism, if simply for protection from violence. Robert Nozick proved this in his great work, Anarchy, State and Utopia.]
And that Ruling Class then makes laws and rules to entrench and increase the wealth and power of the Ruling Class. Over time they enserf the common man.
QED: Pure Libertarianism leads to Serfdom for the common man. Libertarianism fails to withstand the analysis of Hayek. This is fatal to Pure Libertarianism.
Examples are the 9th century in Europe, the 19th century in America and the 1990s in Russia.
Tomorrow I will examine the stability of the Libertarian system. Will it inevitably lead to the failure outlined above?
Fraternal Libertarianism does NOT succumb to the Hayek criticism. Its inherent hard controls on the Ruling Classes prevent them from gaining sufficient power to enserf the common man.
Word of the Day
"Supernal" - adjective [$10] esp. poetic
Supernal means 1. heavenly, divine; 2. of or concerning the sky; 3. lofty (of more than earthly or human excellence, powers, etc.)
Sentence: Devotees to pure Libertarianism wax eloquently about the goodness and benefits of that ideology, ascribing it near supernal powers. But on examination, that systems has fatal flaws that Bunkerman will expose this week.
Thursday, January 21, 2010
Chavez = Mussolini
A potential big problem in this hemisphere is Hugo Chavez, the tyrant of Venezuela. The correct historical model for understanding his antics is Benito Mussolini. As Mussolini did almost 100 years ago in Italy, Chavez manipulates the "masses" to get power. He doesn't care about the people at all; all he cares about is his own power. He's ruthless and a cunning liar, as was Mussolini. And he's likes to be a showman to get attention, as did Mussolini.
Don't believe all that Allied World War II propaganda denigrating Mussolini as a buffoon. He was a very, very dangerous person who did great evil. Adolf Hitler is famously quoted as saying that he owed everything to Mussolini, who showed how a small determined group could seize power and retain power. In that sense, Mussolini is partly responsible for begetting all the evils of Nazism.
Now we have Hugo Chavez as a 21st century Mussolini in our own hemisphere. He's having big economic problems, mostly of his own doing. What can we now expect ?
He needs a war to mobilize support and militarize his nation even more. Otherwise, the economic problems might lead to him losing power. That's all he cares about, himself.
Don't ignore this tyrant's bluster over Columbia. He clearly wants a war with Columbia to either conquer it to loot or simply to create more nationalist fervor in Venezuela that he can use to retain power.
So far, Obama has been firm, ignoring his threats and lies, while arming and helping Columbia. He needs to be very wary and keep some military assets in reserve to help if Chavez does a surprise raid ... or more.
Markets
The Green-Red rule prompted me to close out the call option speculation early yesterday for a small loss. No big deal - I hit the ball well, but Ms. Market caught my line drive. I'll keep my bat ready for another good pitch.
Ruling Classes
I am disgusted with all this press fawning over the views of "one of the world's richest men" over matters they know little about. I just heard Blabberg interview a Saudi prince about China. sheesh, what crap! Ditto re interviewing Soros or Gates or Buffet about anything except their primary expertise. This is a problem with the ruling classes - they want to tell everyone how to live and what to do. To the Rich & Powerful: Shut up and spend your money on something useful and good for humanity.
Word of the Day
"Occlude" - verb, transitive [$10]
Occlude means 1. to stop up or close (pores or a surface), obstruct (a passage); 2. (Chemistry) absorb and retain (gasses or impurities).
Sentence: Any implementation of populist libertarian philosophy would occlude the power of the ruling classes. In colloquial terms, go ahead and earn money, but don't try to become an aristocracy and don't tell the common man how to live.
Don't believe all that Allied World War II propaganda denigrating Mussolini as a buffoon. He was a very, very dangerous person who did great evil. Adolf Hitler is famously quoted as saying that he owed everything to Mussolini, who showed how a small determined group could seize power and retain power. In that sense, Mussolini is partly responsible for begetting all the evils of Nazism.
Now we have Hugo Chavez as a 21st century Mussolini in our own hemisphere. He's having big economic problems, mostly of his own doing. What can we now expect ?
He needs a war to mobilize support and militarize his nation even more. Otherwise, the economic problems might lead to him losing power. That's all he cares about, himself.
Don't ignore this tyrant's bluster over Columbia. He clearly wants a war with Columbia to either conquer it to loot or simply to create more nationalist fervor in Venezuela that he can use to retain power.
So far, Obama has been firm, ignoring his threats and lies, while arming and helping Columbia. He needs to be very wary and keep some military assets in reserve to help if Chavez does a surprise raid ... or more.
Markets
The Green-Red rule prompted me to close out the call option speculation early yesterday for a small loss. No big deal - I hit the ball well, but Ms. Market caught my line drive. I'll keep my bat ready for another good pitch.
Ruling Classes
I am disgusted with all this press fawning over the views of "one of the world's richest men" over matters they know little about. I just heard Blabberg interview a Saudi prince about China. sheesh, what crap! Ditto re interviewing Soros or Gates or Buffet about anything except their primary expertise. This is a problem with the ruling classes - they want to tell everyone how to live and what to do. To the Rich & Powerful: Shut up and spend your money on something useful and good for humanity.
Word of the Day
"Occlude" - verb, transitive [$10]
Occlude means 1. to stop up or close (pores or a surface), obstruct (a passage); 2. (Chemistry) absorb and retain (gasses or impurities).
Sentence: Any implementation of populist libertarian philosophy would occlude the power of the ruling classes. In colloquial terms, go ahead and earn money, but don't try to become an aristocracy and don't tell the common man how to live.
Monday, January 4, 2010
A New Year Begins ...
Krypto Fund returned 21.56%, beating most hedge funds according to FT. Krypto Fund uses a simple asset allocation model on Excel to invest the long term money among asset classes: cash, TIPs, bonds, US stocks, Foreign stocks, real estate and precious metals. The fees are dog biscuits, paid to the manager, Krypto, my dog, who pushes a button on the computer to re-allocate. Who needs beefers ?
What do we know now that we did not know one year ago ?
First
The big banks all repaid TARP in 2009. Losses, while large, were not the industry-wide monumental tidal wave that the bomb throwers proclaims so stridently in 2008. That means that "most" of the collapse in the financial markets in 2008 truly was a simple panic, not the incurable end of the world proclaimed.
How did the panic get so bad ?
Simple: huge money pools of hedge funds sloshing around worldwide making huge "bets" on collapse through short selling (often naked) and credit defaults swaps. The simple answer is, "The beefers did it."
Don't overstate or understate this. There was more than smoke. There was a modest fire that the Fed was controlling. But then the beefers threw on the gasoline.
The TARP investments in the big banks helped stop the panic, which was truly out of control as a run on the bank in money market funds was incredibly dangerous. Note: only one major money fund broke the buck, due to excessive investment in Lehman paper.
Second
This means that the Republicans in Congress were completely wrong in causing the initial defeat of TARP. After that defeat, the stock market fell 20% and the retirement assets of a generation were gutted. The market has "almost" recovered that, but not quite. The pure libertarian philosophy, while so attractive in theory, proved again to be inadequate in a dynamical world.
Third
The public was NOT right, either in its opposition to the TARP or in its belief that housing was a retirement asset that could not go down. That belief led millions upon millions of them to commit to pay too much of their income for housing, thinking it would go up in value to let them repay that huge debt burden. This was a "greater fool" bubble by the PUBLIC. The group thinking of the people was WRONG.
Book of the Week
"Public Opinion" by Walter Lippmann. This excellent book was written in 1922 by the man who became the first nationally syndicated columnist and wrote a hugely influential column for forty years. The main point of the book is that the public and most governmental leaders have insufficient information to make truly informed decisions about modern, complex issues. I state part of his thesis thus: "polls based on ignorance are meaningless". They are useless for making informed, correct decisions.
It's remarkable to me that this book and its arguments seem foreign to modern journalists. They blather endlessly about what the people think about some issue yet Lippmann almost 90 years ago knew, and showed, that the people mostly are ignorant of even the simplest facts or theory to base a truly informed opinion. Lippmann had personal experience in the World War I propaganda machine and knew both its power and the difficulty informing the people.
He also was one of the rich and powerful and recognized the power of his class. He recognized how they often used their power to gather more power and wealth.
I haven't yet finished the book, but so far, it's a jewel.
PS: The new edition with the introduction by Lippmann's biographer, Ronald Steel, is best.
Word of the Day
"Scry" - verb, intransitive [$10]
Scry means to divine by crystal gazing.
Sentence: Bunkerman did not scry to learn the conclusions in today's blog; they came from the application of simple principles and ruthless logic to events in the public press.
What do we know now that we did not know one year ago ?
First
The big banks all repaid TARP in 2009. Losses, while large, were not the industry-wide monumental tidal wave that the bomb throwers proclaims so stridently in 2008. That means that "most" of the collapse in the financial markets in 2008 truly was a simple panic, not the incurable end of the world proclaimed.
How did the panic get so bad ?
Simple: huge money pools of hedge funds sloshing around worldwide making huge "bets" on collapse through short selling (often naked) and credit defaults swaps. The simple answer is, "The beefers did it."
Don't overstate or understate this. There was more than smoke. There was a modest fire that the Fed was controlling. But then the beefers threw on the gasoline.
The TARP investments in the big banks helped stop the panic, which was truly out of control as a run on the bank in money market funds was incredibly dangerous. Note: only one major money fund broke the buck, due to excessive investment in Lehman paper.
Second
This means that the Republicans in Congress were completely wrong in causing the initial defeat of TARP. After that defeat, the stock market fell 20% and the retirement assets of a generation were gutted. The market has "almost" recovered that, but not quite. The pure libertarian philosophy, while so attractive in theory, proved again to be inadequate in a dynamical world.
Third
The public was NOT right, either in its opposition to the TARP or in its belief that housing was a retirement asset that could not go down. That belief led millions upon millions of them to commit to pay too much of their income for housing, thinking it would go up in value to let them repay that huge debt burden. This was a "greater fool" bubble by the PUBLIC. The group thinking of the people was WRONG.
Book of the Week
"Public Opinion" by Walter Lippmann. This excellent book was written in 1922 by the man who became the first nationally syndicated columnist and wrote a hugely influential column for forty years. The main point of the book is that the public and most governmental leaders have insufficient information to make truly informed decisions about modern, complex issues. I state part of his thesis thus: "polls based on ignorance are meaningless". They are useless for making informed, correct decisions.
It's remarkable to me that this book and its arguments seem foreign to modern journalists. They blather endlessly about what the people think about some issue yet Lippmann almost 90 years ago knew, and showed, that the people mostly are ignorant of even the simplest facts or theory to base a truly informed opinion. Lippmann had personal experience in the World War I propaganda machine and knew both its power and the difficulty informing the people.
He also was one of the rich and powerful and recognized the power of his class. He recognized how they often used their power to gather more power and wealth.
I haven't yet finished the book, but so far, it's a jewel.
PS: The new edition with the introduction by Lippmann's biographer, Ronald Steel, is best.
Word of the Day
"Scry" - verb, intransitive [$10]
Scry means to divine by crystal gazing.
Sentence: Bunkerman did not scry to learn the conclusions in today's blog; they came from the application of simple principles and ruthless logic to events in the public press.
Wednesday, June 10, 2009
What is Normal?
1200.
That's where the S&P would be if the SEC and CFTC and Congress had not gutted financial market regulation to let the Vikings rape & pillage stocks without any rules or regulation.
[Doubters: when Warren Buffet and George Soros agree with Bunkerman, question your thinking.]
And the panic happened last July to October. The retirement savings of middle America was gutted by 35%. The drop stunned the people and they reacted, gutting spending on everything. The real recession began. Thank you, libertarians. I hope you enjoyed the fruits of your "no regulation" mantra. Letting the Vikings raid the financial landscape sure helped, didn't it.
So the panic dropped the markets to the 800-900 range last fall. Then the Obama "panic of the conservatives" dropped it 666 in March. All the rally from early March to April did was wipe out the Obama panic, to get the markets back to the fall trading range, i. e. to the Viking Raid panic levels. The "too far, too fast" crowd doesn't seem to recognize that. Erasing a panic fall - which did go too far down too fast - is NOT becoming overextended. The baseline is the fall trading range.
The stock markets have been consolidating in those levels since late March. Now the S&P 500 is over its 200 day moving average. The 50 day moving average is rising.
Commodity prices are rising, perhaps to re-entry by speculators, or perhaps to user hedging. Shipping rates are rising. Demand in Asia is rebounding. And all that "stimulus" money remains to be spent. The Fed is still accomodative. TALF is working. Well-run major banks are re-paying TARP monies foisted on them.
Lots of pain exists in housing, especially in the sun and surf areas where speculators & the second home crowd played. And the jobs market stinks. Thanks to the Vikings. And the financial libertarians. But all the newly free people of the world want to improve their lives and that tailwind is huge.
Obama Fund is sitting long at about 125% long on stocks that should continue to outperform on a "Return to Normalcy".
Word of the Day
"Crawfish" - noun and verb [$10]
Crawfish means (noun) = crayfish; (intransitive verb) (often followed by 'out') US colloquial retreat, back out.
Sentence: As Bunkerman watches Congress and the Obama administration crawfish away from real, comprehensive reform of the financial markets and regulation, he feels disgust and anger.
Le Mot du Jour
"Salir" - verb, regular -ir conjugation
Salir means 1. to make dirty, to make a mess in, to mess up; 2. to corrupt, to defile.
Le Phrase: Les libertaires de la haute finance salissent le monde.
Sentence: The libertarians of high finance messed up the world.
That's where the S&P would be if the SEC and CFTC and Congress had not gutted financial market regulation to let the Vikings rape & pillage stocks without any rules or regulation.
- They repealed Glass-Steagal to let banks speculate in the financial markets with depositors' money.
- They dropped the uptick rule so raids could push stocks down with no relief to cause fear & panic.
- They gutted efforts to regulate derivatives, which then let credit default swaps and equity derivatives become new "weapons of mass destruction" for the Vikings to manipulate stocks and cause more panic.
- They permitted creation of uncountable numbers of short and ultra short ETFs that are essentially betting machines for speculators.
- And they opened the field to the Street market makers via the Madoff rule and the ETF short sale rules to let market makers "print" stocks to short with NO rules at all. Short selling of nonexistent shares rose to huge amounts.
[Doubters: when Warren Buffet and George Soros agree with Bunkerman, question your thinking.]
And the panic happened last July to October. The retirement savings of middle America was gutted by 35%. The drop stunned the people and they reacted, gutting spending on everything. The real recession began. Thank you, libertarians. I hope you enjoyed the fruits of your "no regulation" mantra. Letting the Vikings raid the financial landscape sure helped, didn't it.
So the panic dropped the markets to the 800-900 range last fall. Then the Obama "panic of the conservatives" dropped it 666 in March. All the rally from early March to April did was wipe out the Obama panic, to get the markets back to the fall trading range, i. e. to the Viking Raid panic levels. The "too far, too fast" crowd doesn't seem to recognize that. Erasing a panic fall - which did go too far down too fast - is NOT becoming overextended. The baseline is the fall trading range.
The stock markets have been consolidating in those levels since late March. Now the S&P 500 is over its 200 day moving average. The 50 day moving average is rising.
Commodity prices are rising, perhaps to re-entry by speculators, or perhaps to user hedging. Shipping rates are rising. Demand in Asia is rebounding. And all that "stimulus" money remains to be spent. The Fed is still accomodative. TALF is working. Well-run major banks are re-paying TARP monies foisted on them.
Lots of pain exists in housing, especially in the sun and surf areas where speculators & the second home crowd played. And the jobs market stinks. Thanks to the Vikings. And the financial libertarians. But all the newly free people of the world want to improve their lives and that tailwind is huge.
Obama Fund is sitting long at about 125% long on stocks that should continue to outperform on a "Return to Normalcy".
Word of the Day
"Crawfish" - noun and verb [$10]
Crawfish means (noun) = crayfish; (intransitive verb) (often followed by 'out') US colloquial retreat, back out.
Sentence: As Bunkerman watches Congress and the Obama administration crawfish away from real, comprehensive reform of the financial markets and regulation, he feels disgust and anger.
Le Mot du Jour
"Salir" - verb, regular -ir conjugation
Salir means 1. to make dirty, to make a mess in, to mess up; 2. to corrupt, to defile.
Le Phrase: Les libertaires de la haute finance salissent le monde.
Sentence: The libertarians of high finance messed up the world.
Tuesday, January 27, 2009
The Arrogance of Wealth and Power II
[This is adapted from the blog post of last year at this time. I was surprised how few changes I had to make to update it.]
“Davos" is the epitome of that syndrome. Rich and powerful people meet in a resort to discuss the "world economy", viz., how they can control the common man and bend him to their wishes. Is increasing human freedom a pillar of their goals ? ... No. Is increasing human culture and knowledge a goal ? ... No. They network among each other to exchange thinking on how to maintain and increase their control over ... the rest of us. Every year Davos makes me want to puke.
Lately I have read in the WSJ, FT, the BBC online, Le Monde and Le Figaro that some in government want to "change capitalism" due to the financial crisis. Hmmm, the world's governments want to tell us how to change "capitalism". I don't think they really know what the word means. That word, "capitalism" is unfortunately a Marxist word for an economic system in contraposition to socialism and communism. "Capitalism" is not simply a system with private capital employed for increasing wealth, but is a label for the entire free private property system where a free man or woman can "own" things and do with them what they please. What people think of as "capitalism" is an effect of this human freedom which developed in the early 19th century as free people found ways to band together and use resources more effectively by sharing and exchanging risks and ideas.
So efforts to "change capitalism" are simply stupid. What does that mean ? If it means anything other than trying to get leaders to "freely" adjust business practices, then it is really a limitation on human freedom. Now some limits on human freedom are fine with me, namely those that prevent the rich & powerful from using their positions to dominate the common man and become new feudal lords. Now huge pools of money from the rich raid companies and small nations like the Vikings of the 9th century. They manipulate the dynamics of markets to create fear and intimidate the common man. And panics of the rich from their unproductive speculations trample the lives and livelihoods of the common man. That's how feudalism began ... fighting men used their skills to dominate farmers into giving up their own freedom and lands and accepting "protection".
So is Davos about actually helping people .. or is it about using and creating fear and grabbing power so "they" can become new Dukes & Barons ? I think it's a bit of both, but the well-meaning fools seeking the former are being used as cover by those knaves seeking the latter. Are restrictions on the rich and powerful a subject at Davos ? What about regulation of hedge funds ? If they want to discuss how to control themselves, fine, that's an admirable topic. Otherwise, they should shut up and leave us alone.
Word of the Day
"Sempiternal" - adjective [$10]; literary; a Mencken word
Sempiternal means eternal, everlasting.
Sentences -
The Mencken usage (from the Truman Presidential election campaign in 1948]: "Every one of them (voters), he (Truman) figured, was itching for something, and he made his campaign by the sempiternal device of engaging to give it to them."
Bunkerman: The sempiternal desires of the rich and powerful for more wealth and power are the psychological cause of their recurrent efforts in history to create an aristocracy to dominate a nation. In many civilizations, this led to the downfall of the civilization as the aristocracy weakened and subjugated the foundational pillars of the its strength, viz., the common man and woman. Instead of interfering with enterprise, central governments should put reasonable limits on that budding aristocracy and prevent it from gaining more wealth and power. The common man and woman should be completely free to pursuit their happiness.
“Davos" is the epitome of that syndrome. Rich and powerful people meet in a resort to discuss the "world economy", viz., how they can control the common man and bend him to their wishes. Is increasing human freedom a pillar of their goals ? ... No. Is increasing human culture and knowledge a goal ? ... No. They network among each other to exchange thinking on how to maintain and increase their control over ... the rest of us. Every year Davos makes me want to puke.
Lately I have read in the WSJ, FT, the BBC online, Le Monde and Le Figaro that some in government want to "change capitalism" due to the financial crisis. Hmmm, the world's governments want to tell us how to change "capitalism". I don't think they really know what the word means. That word, "capitalism" is unfortunately a Marxist word for an economic system in contraposition to socialism and communism. "Capitalism" is not simply a system with private capital employed for increasing wealth, but is a label for the entire free private property system where a free man or woman can "own" things and do with them what they please. What people think of as "capitalism" is an effect of this human freedom which developed in the early 19th century as free people found ways to band together and use resources more effectively by sharing and exchanging risks and ideas.
So efforts to "change capitalism" are simply stupid. What does that mean ? If it means anything other than trying to get leaders to "freely" adjust business practices, then it is really a limitation on human freedom. Now some limits on human freedom are fine with me, namely those that prevent the rich & powerful from using their positions to dominate the common man and become new feudal lords. Now huge pools of money from the rich raid companies and small nations like the Vikings of the 9th century. They manipulate the dynamics of markets to create fear and intimidate the common man. And panics of the rich from their unproductive speculations trample the lives and livelihoods of the common man. That's how feudalism began ... fighting men used their skills to dominate farmers into giving up their own freedom and lands and accepting "protection".
So is Davos about actually helping people .. or is it about using and creating fear and grabbing power so "they" can become new Dukes & Barons ? I think it's a bit of both, but the well-meaning fools seeking the former are being used as cover by those knaves seeking the latter. Are restrictions on the rich and powerful a subject at Davos ? What about regulation of hedge funds ? If they want to discuss how to control themselves, fine, that's an admirable topic. Otherwise, they should shut up and leave us alone.
Word of the Day
"Sempiternal" - adjective [$10]; literary; a Mencken word
Sempiternal means eternal, everlasting.
Sentences -
The Mencken usage (from the Truman Presidential election campaign in 1948]: "Every one of them (voters), he (Truman) figured, was itching for something, and he made his campaign by the sempiternal device of engaging to give it to them."
Bunkerman: The sempiternal desires of the rich and powerful for more wealth and power are the psychological cause of their recurrent efforts in history to create an aristocracy to dominate a nation. In many civilizations, this led to the downfall of the civilization as the aristocracy weakened and subjugated the foundational pillars of the its strength, viz., the common man and woman. Instead of interfering with enterprise, central governments should put reasonable limits on that budding aristocracy and prevent it from gaining more wealth and power. The common man and woman should be completely free to pursuit their happiness.
Wednesday, December 31, 2008
Goodbye 2008 and more
Saying goodbye to 2008 from the perspective of an investor is a pleasant prospect. The cluster panic of the rich and of the masters of the Universe on Wall Street brought pain to the common man and the long term investors. To me, 2008 also punctuated with a big, bold, full stop "." to many other false ideas and concepts and practices.
Here is my list to receive my "au revoir". Some are New Year's wishes.
1. Hedge funds as an "asset class".
2. Hedge fund managers as demi-gods.
3. Pure libertarianism.
4. The home as a source of spending power.
5. The home as a retirement asset.
6. Credit default swaps.
7. Nominal CPI as a meaningful measure of true inflation - core rules !
8. The McMansion in exurbia.
9. The SEC as an independent agency.
10. Derivatives as unregulated markets.
11. "Market value" as a rationally derived number.
12. George W. Bush - aka "Lyndon" - as a President and leader.
13. The source of wealth of three of the world's "bad boys" (Russia, Venezuela and Iran).
14. Commodity "investing" in futures and derivatives - just speculation.
HAPPY NEW YEAR !
Word of the Day
"Oneiric" - adjective [$10]
Oneiric means of or related to dreams or dreaming
Sentence: As we live in 2009 and beyond under the leadership of Obama, will our oneiric thoughts of 2008 be memories of a single nightmare or a recurring one from which we cannot awake ?
Here is my list to receive my "au revoir". Some are New Year's wishes.
1. Hedge funds as an "asset class".
2. Hedge fund managers as demi-gods.
3. Pure libertarianism.
4. The home as a source of spending power.
5. The home as a retirement asset.
6. Credit default swaps.
7. Nominal CPI as a meaningful measure of true inflation - core rules !
8. The McMansion in exurbia.
9. The SEC as an independent agency.
10. Derivatives as unregulated markets.
11. "Market value" as a rationally derived number.
12. George W. Bush - aka "Lyndon" - as a President and leader.
13. The source of wealth of three of the world's "bad boys" (Russia, Venezuela and Iran).
14. Commodity "investing" in futures and derivatives - just speculation.
HAPPY NEW YEAR !
Word of the Day
"Oneiric" - adjective [$10]
Oneiric means of or related to dreams or dreaming
Sentence: As we live in 2009 and beyond under the leadership of Obama, will our oneiric thoughts of 2008 be memories of a single nightmare or a recurring one from which we cannot awake ?
Friday, October 31, 2008
TGIF and more
Perhaps the credit crisis is ending. LIBOR is falling. The Fed seems as focused as a laser on easing the shortage of dollars around the world. The new dollar swap lines with Brazil, Mexico, Korea and Singapore were cheered in those areas and emerging market stock prices rose explosively. Time will tell, but the pattern of steady improvement now seems positive.
Now we all know that the "moral hazard" gripe is truly a canard of the pharisaic libertarians who want to let the beefers and ruling classes turn the common man of the world into serfs to be ruled.
Battleship Ben is truly showing fine mettle and is using his ammunition - an endless supply - with great effect now. His grade last year - 2007 - was about "D". He started out this year with a "C" and has been acing exam after exam, so it's now perhaps even a B+. I guess he reads this blog as the parsimonious growth of the monetary base prior to September has been replaced with a massive increase since then. That's needed to make up for a few years' of slow growth in that crucial measure that probably created part of this mess. Those errors were caused by that silly infatuation with "fighting" non-existent inflation.
Actions
None. I was jocularly accused of being a perma-bear in yesterday's comments. Sheesh ... my Alpha Fund is long about 150% with a number of extremely economically sensitive stocks, viz., CVX, DVN, RIG, FCX, BHP and smaller positions in EXM, DRYS, GNK, JOYG and MBI. As soon as this wave of beefer liquidations and misguided public selling of mutual funds runs its course, a grand new bull market should commence. Perhaps it has already begun.
Word of the Day
"Apropos" - adjective, preposition and adverb [$10]; this word we use a lot but not might know its precise meaning; also, the final 's' is silent.
Apropos means (adjective) to the point or purpose; appropriate; (preposition, often followed by 'of' colloquial) in respect of, concerning; (adverb) 1. appropriately, 2. by the way, incidentally.
Sentence: Apropos suggestions that Bunkerman is a perma-bear, he was bearish for about two weeks after the idiotic libertarian Republicans first defeated the Paulson plan. Going to cash in the Alpha Fund on that event did, however, him quite a bit of money, though.
Now we all know that the "moral hazard" gripe is truly a canard of the pharisaic libertarians who want to let the beefers and ruling classes turn the common man of the world into serfs to be ruled.
Battleship Ben is truly showing fine mettle and is using his ammunition - an endless supply - with great effect now. His grade last year - 2007 - was about "D". He started out this year with a "C" and has been acing exam after exam, so it's now perhaps even a B+. I guess he reads this blog as the parsimonious growth of the monetary base prior to September has been replaced with a massive increase since then. That's needed to make up for a few years' of slow growth in that crucial measure that probably created part of this mess. Those errors were caused by that silly infatuation with "fighting" non-existent inflation.
Actions
None. I was jocularly accused of being a perma-bear in yesterday's comments. Sheesh ... my Alpha Fund is long about 150% with a number of extremely economically sensitive stocks, viz., CVX, DVN, RIG, FCX, BHP and smaller positions in EXM, DRYS, GNK, JOYG and MBI. As soon as this wave of beefer liquidations and misguided public selling of mutual funds runs its course, a grand new bull market should commence. Perhaps it has already begun.
Word of the Day
"Apropos" - adjective, preposition and adverb [$10]; this word we use a lot but not might know its precise meaning; also, the final 's' is silent.
Apropos means (adjective) to the point or purpose; appropriate; (preposition, often followed by 'of' colloquial) in respect of, concerning; (adverb) 1. appropriately, 2. by the way, incidentally.
Sentence: Apropos suggestions that Bunkerman is a perma-bear, he was bearish for about two weeks after the idiotic libertarian Republicans first defeated the Paulson plan. Going to cash in the Alpha Fund on that event did, however, him quite a bit of money, though.
Tuesday, October 28, 2008
Gold
First …
An unusual short squeeze is occurring on the German stock market. Porsche wants to acquire Volkswagen and the smart beefers thought they had an easy profit on shorting Volkswagen shares. Wrong!
From FT:
"Volkswagen's shares more than doubled on Monday after Porsche moved to cement its control of Europe’s biggest carmaker and hedge funds, rushing to cover short positions, were forced to buy stock from a shrinking pool of shares in free float.
"VW shares rose 147 per cent after Porsche unexpectedly disclosed that through the use of derivatives it had increased its stake in VW from 35 to 74.1 per cent, sparking outcry among investors, analysts and corporate governance experts. … Porsche revealed on Sunday that it held 31.5 per cent in derivatives in VW. Bafin, Germany’s financial regulator, recently ruled that companies were not obliged to disclose such positions where the derivatives were settled into cash rather than shares.
"But the sudden disclosure meant there was a free float of only 5.8 per cent – the state of Lower Saxony owns 20.1 per cent – sparking panic among hedge funds."
Volkswagen stock price is up 100% this morning. And the beefers ... a house of pain. Shucks. I suppose those paragons of “free markets” will want government intervention now.
Gold
As we watch the herd of beefers slowly disappear in this storm, let’s consider some value analysis for that ultimate store of value – gold. I still subscribe to some commodity research sites, as I might someday want to play in that sandbox again. So I'll look at the long term monthly chart for gold. First, my thinking.
Acquaintances know I loaded up on physical gold coins - American Eagles, please - and silver bars in the period around 2002-3. [The EFTs for gold & silver did not exist then.] I'm a long-term bull on gold and silver as over the decades, the growth of demand in India and China will slowly overwhelm European central bank sales; plus emerging market central banks will buy some gold; plus mine production in South Africa is declining. Those are primal among other reasons to be bullish on gold long term. But long term is ... a long time. What now ?
The recent pop to $1000 for gold and $20 for silver were screaming sells, being due to beefer momentum moves well beyond the long term trends.
What about those trends ?
The trend from the bottom in 2000 until 2005 was more determined by real, physical trends. After 2005 the beefers took over with their antics and the price got ahead of fundamentals. So where does the old monthly trend line project ? The $550-600 area in 2009. So that's good value for long term holding periods. The current drop might not get there, but at that area, I will again overweight gold in Krypto Fund via ETFs and mutual funds and might even buy more physical gold.
Actions
None.
Politics
I favor a rescue plan for the auto industry provided "real" changes in management occurs. My memories of B-school discussion sessions about 30 years ago wondering about how the auto industry cold cope keep coming back to me. Decades of opportunities were squandered by unimaginative managements.
Word of the Day
"Pharisaic - adjective [$10] used in upper case "P" for definition 1. and lower case "p" for 2.
Pharisaic means 1. a member of an ancient Jewish sect, distinguished by strict observance of the traditional and written law, and commonly held to have pretensions of superior sanctity; 2. a self-righteous person; a hypocrite.
Sentence: Events of the past few months might consign Pharisaic libertarianism to its condign place in the dustbin of history along with Marxism. The colossal error of permitting the financial vikings [aka beefers] to grow to gigantic size and to raid and pillage and generally wreck market economies surely is now obvious to all.
An unusual short squeeze is occurring on the German stock market. Porsche wants to acquire Volkswagen and the smart beefers thought they had an easy profit on shorting Volkswagen shares. Wrong!
From FT:
"Volkswagen's shares more than doubled on Monday after Porsche moved to cement its control of Europe’s biggest carmaker and hedge funds, rushing to cover short positions, were forced to buy stock from a shrinking pool of shares in free float.
"VW shares rose 147 per cent after Porsche unexpectedly disclosed that through the use of derivatives it had increased its stake in VW from 35 to 74.1 per cent, sparking outcry among investors, analysts and corporate governance experts. … Porsche revealed on Sunday that it held 31.5 per cent in derivatives in VW. Bafin, Germany’s financial regulator, recently ruled that companies were not obliged to disclose such positions where the derivatives were settled into cash rather than shares.
"But the sudden disclosure meant there was a free float of only 5.8 per cent – the state of Lower Saxony owns 20.1 per cent – sparking panic among hedge funds."
Volkswagen stock price is up 100% this morning. And the beefers ... a house of pain. Shucks. I suppose those paragons of “free markets” will want government intervention now.
Gold
As we watch the herd of beefers slowly disappear in this storm, let’s consider some value analysis for that ultimate store of value – gold. I still subscribe to some commodity research sites, as I might someday want to play in that sandbox again. So I'll look at the long term monthly chart for gold. First, my thinking.
Acquaintances know I loaded up on physical gold coins - American Eagles, please - and silver bars in the period around 2002-3. [The EFTs for gold & silver did not exist then.] I'm a long-term bull on gold and silver as over the decades, the growth of demand in India and China will slowly overwhelm European central bank sales; plus emerging market central banks will buy some gold; plus mine production in South Africa is declining. Those are primal among other reasons to be bullish on gold long term. But long term is ... a long time. What now ?
The recent pop to $1000 for gold and $20 for silver were screaming sells, being due to beefer momentum moves well beyond the long term trends.
What about those trends ?
The trend from the bottom in 2000 until 2005 was more determined by real, physical trends. After 2005 the beefers took over with their antics and the price got ahead of fundamentals. So where does the old monthly trend line project ? The $550-600 area in 2009. So that's good value for long term holding periods. The current drop might not get there, but at that area, I will again overweight gold in Krypto Fund via ETFs and mutual funds and might even buy more physical gold.
Actions
None.
Politics
I favor a rescue plan for the auto industry provided "real" changes in management occurs. My memories of B-school discussion sessions about 30 years ago wondering about how the auto industry cold cope keep coming back to me. Decades of opportunities were squandered by unimaginative managements.
Word of the Day
"Pharisaic - adjective [$10] used in upper case "P" for definition 1. and lower case "p" for 2.
Pharisaic means 1. a member of an ancient Jewish sect, distinguished by strict observance of the traditional and written law, and commonly held to have pretensions of superior sanctity; 2. a self-righteous person; a hypocrite.
Sentence: Events of the past few months might consign Pharisaic libertarianism to its condign place in the dustbin of history along with Marxism. The colossal error of permitting the financial vikings [aka beefers] to grow to gigantic size and to raid and pillage and generally wreck market economies surely is now obvious to all.
Monday, October 13, 2008
Back from the Heartland
I have returned Sunday afternoon from my hometown in SE Ohio, enduring typically shabby treatment from an airline. My hometown is quite a delightful place to visit and, in fact, to have grown up in as a child and young person. I stayed in a pleasant cabin in the woods - naturally feeling quite at home. Partaking of the local food establishments instead of McDonald's for this trip, I enjoyed fine meals including a particularly good New York Strip steak and accompanying wine at a restaurant. More fine local fare included several chocolate milk shakes, homemade, beer-battered onion rings, a fine pizza at my childhood favorite establishment and a huge breakfast for $4. "Inflation" was nonexistent, as usual.
Since I had no Internet service during the trip and quite limited news exposure, I missed the "fun" of the last half of last week. Ugh ! However, perhaps the ague peaked on Friday.
Of course much colossal foolishness is being slowly exposed by this turmoil. Iceland is a fine example. Apparently billion of Pounds were deposited into its banks by British "investors" - uh ... I guess they were really speculators. Iceland has 300,000 people, fewer than Columbus, Ohio. Who in any rational frame of mind would "invest" billions in banks in such a tiny place ?
The Euro-nations seems to be working together now - that is good.
In case you are wondering why banks and markets need to be supported and preserved by government, I suggest you consider that direct cause and effect relationships exist for about 1,500 years or perhaps even 2,000 years or more connecting prosperity of communities and towns and cities and nations to their having working markets for people to exchange goods and services. Credit is essential for this activity to be extended beyond face-to-face contact.
Why do pundits pontificate on matters on which they clearly have never read a scholarly work ? I heard a fellow on Bloomberg early this morning citing the Panic of 1873 as an analogy. I have read books about every panic of the 19th century and there is no doubt that 1873 bears almost no connection to today.
The Fed has made its dollar swap lines unlimited in size to provide dollars to the BOE, ECB and Swiss National Banks. So this should get the Eurodollar market moving . I have wondered why there has been a shortage of dollars in Europe. Perhaps US banks and money market funds cut back lending there. Or perhaps the Arab and Russian pulled back. Over time perhaps we will learn the cause of this problem, which is really in the center of this maelstrom.
I read in the WSJ and FT that all those "wonderful" over-the-counter derivative contracts in both commodities and credit default swaps are now being moved to central clearing exchanges. I remember that fool, Alan Greenspan aka Elmer, saying how "wonderful" all the liquidity those derivative markets provided. Sheesh.
This morning electronics giant Phillips said it was seeing lower demand and was dropping its stock buyback programs. Sigh ... another example of stupidity and greed - they only do stock buybacks at high prices.
Internet Idiotcy
I have seem now twice an example of false information propagated over the Internet, from completely unconnected people. An email being sent around the world says that a better use of the $85 billion being used to support AIG would be to give it to the US taxpayers and that $425,000 per person could result. Uh ... the writer made a math error ... three too many zeros. The correct math gives $425, being $85 billion divided by 200 million persons. Of course, Bunkerman knows his math and checked the facts.
I wonder if this type of stupid, false commentary is a cause of public antipathy to the Paulson plan ?
Markets
Time to buy. I will be buying stocks today and all week as long as the governments keep working hard and together .. and not bickering.
As far as banks, ... and now there was one .. viz. JPM. And perhaps HBC. It appears these are the last two banks that are well run and do not need government or Warren Buffet's help and are not cutting dividends. So those two will be the ones that will emerge untrammeled by government restriction and not massively diluted. BAC's head cad, Ken Lewis, blew it by overpaying for Merrill Lynch. And C's Victor Pandit similarly blew it on cutting the dividend in bidding for WB. I'd consider investing in WFC, but after it raises the capital that it says it will raise to pay for WB. But one wonders if WFC is overpaying, too.
JPM showed discipline by buying WM for zero. I wonder if it will buy MS ?
Hmmm CHK's CEO got a multibillion margin call and had to dump billions in stock. I read that Sumner Redstone also got a margin call. Interesting.
The Root Causes
Well, I suppose all last week beefers and the rich were panicking and selling all they had. That was the source of all that selling - the deluge. Perhaps it's over now ... or will be soon over.
The "root cause" of all this pain is the collective beefer community - the trillions put into speculative hedge funds and or run by aggressive advisors for the rich who wanted a "free lunch" of "steady returns in good or bad markets. That is and was known to be impossible in such size. So a huge bubble was created by the rich and their quacksalver advisers in their greed. That is why the credit derivative market was created ... why the subprime market could grow so large ... and is why the over-the-counter trading in commodities could grow so large to cause an oil bubble.
The massive leverage that pundits cite which must be cut back resides in hedge funds as the counterparty to the banks. And it's being liquidated.
Gigantic pools of money simply need to be massive restricted. Period.
The stock market could never become a grand new, bull market without the breaking of those pools, whose trading nonsense weighed on markets and diverted massive sums from production investment. Now they are dying and perhaps, as the death of the dinosaurs freed the world for mammalian development, a new wave of diverse growth led by the free peoples of the world can now be develop and persist.
Word of the Day
"Ideocratic" - adjective [$10,000 ???] this word appears in no dictionaries. But its related word, "ideocracy", does appear in Dictionary.com in Webster's New Millenium dictionary.
Ideocracy means rule or government based on an idea or theory.
Ideocratic means of, or related to, or derived from ideocracy. Compare to theocratic, democratic, timocratic, etc.
Sentences:
Original usage - [from Reflections on a Ravaged century, by R. Conquest, pg. 89] "The full pathology of an Idea is to be seen in pure form in, for example, the whole lethal activity of the Khmer Rouge. ... We shall consider the content, and the history, of these ideocratic movements and States in later chapters."
Current Usage: The untrammeled ability of huge pools of money to be created and run rampant around the world's financial markets further facilitated creation of dangerous derivative markets. All this occurred because governments and regulators were smitten by, and run according to ideocratic notions of pure libertarianism and "free" markets.
Since I had no Internet service during the trip and quite limited news exposure, I missed the "fun" of the last half of last week. Ugh ! However, perhaps the ague peaked on Friday.
Of course much colossal foolishness is being slowly exposed by this turmoil. Iceland is a fine example. Apparently billion of Pounds were deposited into its banks by British "investors" - uh ... I guess they were really speculators. Iceland has 300,000 people, fewer than Columbus, Ohio. Who in any rational frame of mind would "invest" billions in banks in such a tiny place ?
The Euro-nations seems to be working together now - that is good.
In case you are wondering why banks and markets need to be supported and preserved by government, I suggest you consider that direct cause and effect relationships exist for about 1,500 years or perhaps even 2,000 years or more connecting prosperity of communities and towns and cities and nations to their having working markets for people to exchange goods and services. Credit is essential for this activity to be extended beyond face-to-face contact.
Why do pundits pontificate on matters on which they clearly have never read a scholarly work ? I heard a fellow on Bloomberg early this morning citing the Panic of 1873 as an analogy. I have read books about every panic of the 19th century and there is no doubt that 1873 bears almost no connection to today.
The Fed has made its dollar swap lines unlimited in size to provide dollars to the BOE, ECB and Swiss National Banks. So this should get the Eurodollar market moving . I have wondered why there has been a shortage of dollars in Europe. Perhaps US banks and money market funds cut back lending there. Or perhaps the Arab and Russian pulled back. Over time perhaps we will learn the cause of this problem, which is really in the center of this maelstrom.
I read in the WSJ and FT that all those "wonderful" over-the-counter derivative contracts in both commodities and credit default swaps are now being moved to central clearing exchanges. I remember that fool, Alan Greenspan aka Elmer, saying how "wonderful" all the liquidity those derivative markets provided. Sheesh.
This morning electronics giant Phillips said it was seeing lower demand and was dropping its stock buyback programs. Sigh ... another example of stupidity and greed - they only do stock buybacks at high prices.
Internet Idiotcy
I have seem now twice an example of false information propagated over the Internet, from completely unconnected people. An email being sent around the world says that a better use of the $85 billion being used to support AIG would be to give it to the US taxpayers and that $425,000 per person could result. Uh ... the writer made a math error ... three too many zeros. The correct math gives $425, being $85 billion divided by 200 million persons. Of course, Bunkerman knows his math and checked the facts.
I wonder if this type of stupid, false commentary is a cause of public antipathy to the Paulson plan ?
Markets
Time to buy. I will be buying stocks today and all week as long as the governments keep working hard and together .. and not bickering.
As far as banks, ... and now there was one .. viz. JPM. And perhaps HBC. It appears these are the last two banks that are well run and do not need government or Warren Buffet's help and are not cutting dividends. So those two will be the ones that will emerge untrammeled by government restriction and not massively diluted. BAC's head cad, Ken Lewis, blew it by overpaying for Merrill Lynch. And C's Victor Pandit similarly blew it on cutting the dividend in bidding for WB. I'd consider investing in WFC, but after it raises the capital that it says it will raise to pay for WB. But one wonders if WFC is overpaying, too.
JPM showed discipline by buying WM for zero. I wonder if it will buy MS ?
Hmmm CHK's CEO got a multibillion margin call and had to dump billions in stock. I read that Sumner Redstone also got a margin call. Interesting.
The Root Causes
Well, I suppose all last week beefers and the rich were panicking and selling all they had. That was the source of all that selling - the deluge. Perhaps it's over now ... or will be soon over.
The "root cause" of all this pain is the collective beefer community - the trillions put into speculative hedge funds and or run by aggressive advisors for the rich who wanted a "free lunch" of "steady returns in good or bad markets. That is and was known to be impossible in such size. So a huge bubble was created by the rich and their quacksalver advisers in their greed. That is why the credit derivative market was created ... why the subprime market could grow so large ... and is why the over-the-counter trading in commodities could grow so large to cause an oil bubble.
The massive leverage that pundits cite which must be cut back resides in hedge funds as the counterparty to the banks. And it's being liquidated.
Gigantic pools of money simply need to be massive restricted. Period.
The stock market could never become a grand new, bull market without the breaking of those pools, whose trading nonsense weighed on markets and diverted massive sums from production investment. Now they are dying and perhaps, as the death of the dinosaurs freed the world for mammalian development, a new wave of diverse growth led by the free peoples of the world can now be develop and persist.
Word of the Day
"Ideocratic" - adjective [$10,000 ???] this word appears in no dictionaries. But its related word, "ideocracy", does appear in Dictionary.com in Webster's New Millenium dictionary.
Ideocracy means rule or government based on an idea or theory.
Ideocratic means of, or related to, or derived from ideocracy. Compare to theocratic, democratic, timocratic, etc.
Sentences:
Original usage - [from Reflections on a Ravaged century, by R. Conquest, pg. 89] "The full pathology of an Idea is to be seen in pure form in, for example, the whole lethal activity of the Khmer Rouge. ... We shall consider the content, and the history, of these ideocratic movements and States in later chapters."
Current Usage: The untrammeled ability of huge pools of money to be created and run rampant around the world's financial markets further facilitated creation of dangerous derivative markets. All this occurred because governments and regulators were smitten by, and run according to ideocratic notions of pure libertarianism and "free" markets.
Wednesday, September 24, 2008
Out of the Beast
I arrived home last evening after 1.5 days in the belly of the Beast ... aka New York City, Manhattan. The Gold Kryptonite martinis at the "club" bar were perfectly made by my friendly bartenders. Then on Tuesday, lunch at the Harvard Club was very fine - poached salmon, fine vegetables and the berries with coffee. The Grill Room was packed with people ... ugh, I wish they had not relaxed the dress code - so many slobs eating in a finely paneled room decorated with paintings is depressing.
People in suits seemed worried about the markets and many were quite bearish. But the common man seemed more interested in the Mets and the playoffs and the Giants and Jets. This is still a rich man's panic.
My special ties again received compliments from strangers of both sexes.
The stupidity of Congressmen and women continues to astonish me.
Buffet buys sweetheart deal from GS. Next time one hears him talk about taxes, remember that his preferred stock dividends are 80% tax-free to Berkshire Hathaway. And when people gush about following his ideas, that might be hard as I didn't notice a public offering of that preferred stock and warrants deal.
A giant beefer reveals huge short positions against some UK banks after the UK's FSA requires disclosure. What a surprise !
The oil market was wild - and oils stocks, too. The signs of beefer liquidation seem strong.
Alpha Fund owns BAC, JPM, CVX, DVN, RIG and FCX in reasonably sized positions, and has a smaller speculative position in MBI, too. BAC is about 1.3x normal size still after the partial sale posted Monday AM. Alpha Fund is roughly 1/2 in the big two fins and 1/2 in the oils+miners. Alpha Fund is on slight margin, about 125%.
Doing nothing. Might buy heavily if more signs of a bottom in home prices emerge. I expect this soon as mortgage rates are low again and anecdotes of real buyers are more frequent.
PS: Hmm I guess I'm being baited - "what do Libertarians think about the Paulson 'plan' ?"
A purist, unthinking libertarian would be against it, I suppose. However one that thinks and has read "Anarchy, State and Utopia" by Robert Nozick might connect the philosophical justification for using the State to protect against violence from persons and catastrophic events with violence against the common man by big money pools and frightened rich & powerful people. And support some parts of it. Uniting resources to avoid catastrophe from being trampled by their stampede makes sense for the common "protective association".
This is why Bunkerman, as a populist libertarian, supports it as it has so far been disclosed. Just as government protects the common man from pirates and gangsters - or should - so should the common man unite and use government to protect themsleves against both the gluttonous Dukes and the Viking raiders in the financial world.
Word of the Day
"Recrudescense" - noun [$10]
Recrudescence means a new outbreak after a period of abatement or inactivity; renewal.
Sentence: Will October 3 bring a recrudescense of rumors about financial firms once the beefer Viking raiders can again profit from short selling raids ?
People in suits seemed worried about the markets and many were quite bearish. But the common man seemed more interested in the Mets and the playoffs and the Giants and Jets. This is still a rich man's panic.
My special ties again received compliments from strangers of both sexes.
The stupidity of Congressmen and women continues to astonish me.
Buffet buys sweetheart deal from GS. Next time one hears him talk about taxes, remember that his preferred stock dividends are 80% tax-free to Berkshire Hathaway. And when people gush about following his ideas, that might be hard as I didn't notice a public offering of that preferred stock and warrants deal.
A giant beefer reveals huge short positions against some UK banks after the UK's FSA requires disclosure. What a surprise !
The oil market was wild - and oils stocks, too. The signs of beefer liquidation seem strong.
Alpha Fund owns BAC, JPM, CVX, DVN, RIG and FCX in reasonably sized positions, and has a smaller speculative position in MBI, too. BAC is about 1.3x normal size still after the partial sale posted Monday AM. Alpha Fund is roughly 1/2 in the big two fins and 1/2 in the oils+miners. Alpha Fund is on slight margin, about 125%.
Doing nothing. Might buy heavily if more signs of a bottom in home prices emerge. I expect this soon as mortgage rates are low again and anecdotes of real buyers are more frequent.
PS: Hmm I guess I'm being baited - "what do Libertarians think about the Paulson 'plan' ?"
A purist, unthinking libertarian would be against it, I suppose. However one that thinks and has read "Anarchy, State and Utopia" by Robert Nozick might connect the philosophical justification for using the State to protect against violence from persons and catastrophic events with violence against the common man by big money pools and frightened rich & powerful people. And support some parts of it. Uniting resources to avoid catastrophe from being trampled by their stampede makes sense for the common "protective association".
This is why Bunkerman, as a populist libertarian, supports it as it has so far been disclosed. Just as government protects the common man from pirates and gangsters - or should - so should the common man unite and use government to protect themsleves against both the gluttonous Dukes and the Viking raiders in the financial world.
Word of the Day
"Recrudescense" - noun [$10]
Recrudescence means a new outbreak after a period of abatement or inactivity; renewal.
Sentence: Will October 3 bring a recrudescense of rumors about financial firms once the beefer Viking raiders can again profit from short selling raids ?
Friday, September 19, 2008
A Failure of Ideology
This financial crisis provides a clear example of critical flaws in pure economic libertarianism.
First, economic libertarianism fails to account for rapid dynamics of financial markets. Rapid changes can be so fast that theoretical counter feedbacks cannot even begin to reverse the excess.
Second, it fails to treat zero point problems, namely, that when a firm goes bankrupt, it collapses to near nothing. Reversal – recovery - cannot occur.
Third, the human emotion of fear is ignored in economic libertarianism. While even political libertarians recognize fear of violence as creating a legitimate governmental role, economic libertarians ignore this in financial markets.
Fourth, economic libertarianism assumes many small players acting in free markets, while financial markets often have huge pools of money that can directly influence prices with their own actions.
For these four reasons – rapid dynamics, zero point error, fear and big money pools – economic libertarian simply does not to provide a “Square Deal” for the common man without a central power to ensure fairness.
Here is an example:
A congeries of beefers use instant messages to pass false rumors that Bank X has huge hidden losses or has lost key customers. They start buying put options on Bank X stock and then all place large orders for credit default swaps of Bank X. Without securing real borrows on the stock, they sell short huge blocks of Bank X common stock, pressing it lower and lower with any uptick respite. Without natural writers, the credit default swap market in Bank X is overwhelmed and its spread blows out, increasing funding costs hugely. Fear for the credit of Bank X is inferred from this huge increase. Little cash is needed to buy these derivative and cause this fear.
More rumors appear in the financial press as the stock price fall is noted and people wonder why. The rating agencies, in search of credibility, put the firm onto credit watch because of its stock price, not for any fundamental reason. Fear grows and spreads.
Bank X soon cannot borrow funds are reasonable rates and begins to bleed cash and customers. The stock falls furthers. There is no time for management to get facts out, which are hard to present and understand by sophomoric financial press anyway. Soon the firm’s losses of customers and cash withdrawals become critical and …
All this could occur as beefers with trillions of funds can and do overwhelm normal market activity. Economic libertarianism permits these huge pools of money to act like raiding Vikings, plundering staid, defenseless monasteries with impunity. In 9th century Europe, no central government existed with powers to stop them. A century of havoc ensued across Europe from France to deep Russia to Sicily to Ireland.
And without some central power to hold back these raiders, massive economic turmoil can hurt the common man for decades.
The US SEC has completely failed in its core mission, viz., to regulate the markets. The SEC seems to have become the sandbox of economic libertarians to build castles in sand. Or perhaps they – the commissioners and staff – are simply corrupt, wanting to be loved by the beefers and law firms where they expect high paying jobs next year.
From news reports overnight, the US SEC may finally be acting. Certainly the new rules on short selling fraud will help. The resistance to this is almost ludicrous. Can you imagine how high stocks would go if buyers could “buy” stocks, not deliver their cash, and yet maintain the position? Yet until today, short sellers could do the analogous: sell short shares, never deliver the stock and keep the position. Incredible. That shows the power of the beefers over the SEC and its staff. Only a crisis is breaking this tangle of corruption and foolish ideology. Fools or knaves … knaves or fools ... or both ?
Actions by the UK FSA has led the way on short selling. Early this AM, the banks in the UK are having huge rallies in their stock prices. And there are reports the US SEC might finally do something to stop the raids of beefers.
Can anyone imagine how much the common man has been hurt by this SEC foolishness and / or knavery ? Honest John McCain is completely correct. The SEC Chairman should be fired.
Markets
Huge rally yesterday. I have no regrets on those sales on Tuesday, by the way. Without those, perhaps I would have sold all my stock on that huge fall on Wednesday. As happened, I protected my most important positions and was clear minded to make a quite profitable trade in MS. And if Hank the Tank had not acted to create a 21st century Reconstruction Finance Corp., that rally yesterday would not have occurred. One really must "Protect Yourself At All Times" in an aggressive fund like my Alpha Fund.
I closed out the MS trade with a fine profit. I suppose hindsight would say I should have held it as the stock will likely rise a lot more today, but ... a 25% one day profit is OK.
I will watch today and think. I want to keep my Alpha Fund size down as it was quite distracting for me recently. I didn't like having to watch it so much for the past few months - it has greatly interfered with my semi-retirement.
PS: “Free Trade” is another failure of economic libertarianism. The problems of rapid dynamics, zero point, and big money (in that case, other nations) cause its failure to provide promised benefits to the common man.
PPS: Babblevision reports that the SEC has prohibited short selling in 799 financial stocks until October 2. Beefers use of this tool to create fear now in abeyance.
Word of the Day
"Moloch" - noun [$10]
Moloch means 1a. (Moloch) a Canaanite idol to whom children were sacrificed; 1b. a tyrannical object of sacrifices; 2. a grotesque spiny slow moving Australian lizard.
Sentence: How many good paying jobs and savings of the common man have been fed to the moloch of pure economic libertarianism ? Honest John McCain understands this as he called for the firing of SEC Chairman Cox. Obama ... nope.
First, economic libertarianism fails to account for rapid dynamics of financial markets. Rapid changes can be so fast that theoretical counter feedbacks cannot even begin to reverse the excess.
Second, it fails to treat zero point problems, namely, that when a firm goes bankrupt, it collapses to near nothing. Reversal – recovery - cannot occur.
Third, the human emotion of fear is ignored in economic libertarianism. While even political libertarians recognize fear of violence as creating a legitimate governmental role, economic libertarians ignore this in financial markets.
Fourth, economic libertarianism assumes many small players acting in free markets, while financial markets often have huge pools of money that can directly influence prices with their own actions.
For these four reasons – rapid dynamics, zero point error, fear and big money pools – economic libertarian simply does not to provide a “Square Deal” for the common man without a central power to ensure fairness.
Here is an example:
A congeries of beefers use instant messages to pass false rumors that Bank X has huge hidden losses or has lost key customers. They start buying put options on Bank X stock and then all place large orders for credit default swaps of Bank X. Without securing real borrows on the stock, they sell short huge blocks of Bank X common stock, pressing it lower and lower with any uptick respite. Without natural writers, the credit default swap market in Bank X is overwhelmed and its spread blows out, increasing funding costs hugely. Fear for the credit of Bank X is inferred from this huge increase. Little cash is needed to buy these derivative and cause this fear.
More rumors appear in the financial press as the stock price fall is noted and people wonder why. The rating agencies, in search of credibility, put the firm onto credit watch because of its stock price, not for any fundamental reason. Fear grows and spreads.
Bank X soon cannot borrow funds are reasonable rates and begins to bleed cash and customers. The stock falls furthers. There is no time for management to get facts out, which are hard to present and understand by sophomoric financial press anyway. Soon the firm’s losses of customers and cash withdrawals become critical and …
All this could occur as beefers with trillions of funds can and do overwhelm normal market activity. Economic libertarianism permits these huge pools of money to act like raiding Vikings, plundering staid, defenseless monasteries with impunity. In 9th century Europe, no central government existed with powers to stop them. A century of havoc ensued across Europe from France to deep Russia to Sicily to Ireland.
And without some central power to hold back these raiders, massive economic turmoil can hurt the common man for decades.
The US SEC has completely failed in its core mission, viz., to regulate the markets. The SEC seems to have become the sandbox of economic libertarians to build castles in sand. Or perhaps they – the commissioners and staff – are simply corrupt, wanting to be loved by the beefers and law firms where they expect high paying jobs next year.
From news reports overnight, the US SEC may finally be acting. Certainly the new rules on short selling fraud will help. The resistance to this is almost ludicrous. Can you imagine how high stocks would go if buyers could “buy” stocks, not deliver their cash, and yet maintain the position? Yet until today, short sellers could do the analogous: sell short shares, never deliver the stock and keep the position. Incredible. That shows the power of the beefers over the SEC and its staff. Only a crisis is breaking this tangle of corruption and foolish ideology. Fools or knaves … knaves or fools ... or both ?
Actions by the UK FSA has led the way on short selling. Early this AM, the banks in the UK are having huge rallies in their stock prices. And there are reports the US SEC might finally do something to stop the raids of beefers.
Can anyone imagine how much the common man has been hurt by this SEC foolishness and / or knavery ? Honest John McCain is completely correct. The SEC Chairman should be fired.
Markets
Huge rally yesterday. I have no regrets on those sales on Tuesday, by the way. Without those, perhaps I would have sold all my stock on that huge fall on Wednesday. As happened, I protected my most important positions and was clear minded to make a quite profitable trade in MS. And if Hank the Tank had not acted to create a 21st century Reconstruction Finance Corp., that rally yesterday would not have occurred. One really must "Protect Yourself At All Times" in an aggressive fund like my Alpha Fund.
I closed out the MS trade with a fine profit. I suppose hindsight would say I should have held it as the stock will likely rise a lot more today, but ... a 25% one day profit is OK.
I will watch today and think. I want to keep my Alpha Fund size down as it was quite distracting for me recently. I didn't like having to watch it so much for the past few months - it has greatly interfered with my semi-retirement.
PS: “Free Trade” is another failure of economic libertarianism. The problems of rapid dynamics, zero point, and big money (in that case, other nations) cause its failure to provide promised benefits to the common man.
PPS: Babblevision reports that the SEC has prohibited short selling in 799 financial stocks until October 2. Beefers use of this tool to create fear now in abeyance.
Word of the Day
"Moloch" - noun [$10]
Moloch means 1a. (Moloch) a Canaanite idol to whom children were sacrificed; 1b. a tyrannical object of sacrifices; 2. a grotesque spiny slow moving Australian lizard.
Sentence: How many good paying jobs and savings of the common man have been fed to the moloch of pure economic libertarianism ? Honest John McCain understands this as he called for the firing of SEC Chairman Cox. Obama ... nope.
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